The new grain contracts will be based on Canola, Barley and Sorghum, and the currency product on the Australian Dollar. Subject to regulatory approval, the contracts will be launched in June this year. The new contracts have been designed in response to demand from participants in both the agricultural and foreign exchange sectors for exchange traded futures and options products that facilitate price discovery and provide tools for risk management.
Conservative projections estimate that after three years the combined annual turnover of the Canola, Barley and Sorghum contracts could amount to 235,000 futures contracts, valued at A$6 million per day. Similar projections for the Australian Dollar contract estimate a potential yearly turnover of 480,000 futures contracts, worth up to A$190 million a day.
The Australian market for canola has grown enormously in recent years, while the markets for barley and sorghum have maintained solid production levels. Currently, market participants such as grain handling firms, millers, trading organisations, stock feeders and exporters use offshore futures contracts to manage their price risk. These new products will complement SFE's existing wheat futures and options contracts and strengthen SFE's plans to establish a 'Grains Complex'.
Demand for the Australian Dollar contract has come from retail traders, agricultural market participants and foreign exchange brokers. They have been attracted to SFE's around the clock trading capability and its ability to create liquid markets.
All four new contracts were developed in conjunction with local market participants, ensuring that they match the needs of the Australian grain industry and foreign exchange market. These initiatives form part of SFE's strategy to diversify its product range and broaden the distribution of its markets via the SYCOM® electronic trading system.
