CME Group, the world's largest and most diverse derivatives exchange, today announced that they have signed an agreement with the JSE Ltd to license CME Group's benchmark corn futures settlement prices to create a new JSE cash-settled corn futures contract.
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The contracts will be listed, traded and settled by the JSE's Safex Agricultural Products Division alongside the current successful South African grain contracts. The 100 metric ton corn contract will see the May 09, July 09 and September 09 expiries introduced for trading on Wednesday 28 January 2009.
"JSE is delighted to enter into this agreement with CME Group, home of the widest range of commodity derivatives on any exchange in the world," said Rod Gravelet-Blondin, JSE Senior General Manager. "Its benchmark corn prices are the world standard and as such will promote deeper, more liquid markets in our domestic Maize futures contracts, to the benefit of all market participants. This represents a further step toward globalizing South Africa's financial markets."
"With the recent volatility of commodity prices becoming an increasing and important focus for many producers, exporters and consumers, access to transparent market prices and reliable risk management tools is essential," said Rick Redding, CME Group Managing Director, Products and Services. "By developing a corn futures contract based on the price set on CME Group's global market, JSE will create an additional tool for hedging price risk or to gain market exposure."
Corn futures provide a way for South Africans to:
- Effectively manage the price risk with a view either on the domestic market or to more easily access the international market via the corn contract which will be traded in the local currency
- Hedge or gain exposure based on expectations of directional price, spread movement or volatility in corn either as an outright position or versus the domestic market
- Realise arbitrage and spread opportunities between USA corn and South African white maize and/or yellow maize through its dynamic electronic trading platform
- More effectively evaluate both the current and future world supply and demand for corn
- Identify short- and long-term cyclical price and volatility patterns for corn.
