Euronext, a wholly owned subsidiary of Intercontinental Exchange Group (NYSE: ICE), has announced that it will launch a combined Rapeseed derivatives complex by the end of 2014, offering the industry both rapeseed meal and rapeseed oil futures and options in individual contracts, subject to all relevant regulatory approvals.
The launch also expands the Euronext commodities offering to cover the bio‐diesel sector as it allows European mineral oil participants to hedge their bio‐diesel price exposure. The launch will complement Euronext’s existing Rapeseed futures and options contracts which have seen significiant positive momentum since their creation in 1994, and in particular for the futures contract, where growth has reached 67% over the past five years.
In 2013, the contract traded 1.9m lots (ADV of 7,300), equivalent to 93 million tonnes of rapseseed. The contract is widely used by industry across the EU and commercial entities that export rapeseed to the EU as a risk mitigation tool, while non‐commercial participation has also grown in recent years.
Alain Brinon, President of the National Crushers, Vegetable Oils and Protein Meal Industry (GTOM) and Vice‐President of the National Oilseeds Organization (ONIDOL) in France, said, “This is an important initiative for the industry as it provides a clear response to the high volatility we have seen in rapeseed pricing. Furthermore it allows the industry to hedge their entire purchase and output chain. We are delighted that Euronext is taking the lead for our clients where there has been a severe absence of underlying physical product hedges.”
Lee Hodgkinson, Head of Euronext’s Markets and Global Sales, said, “A number of external factors has combined to convince us that the timing for this launch is appropriate: world production of rapeseed has grown by over 80% in the last 10 years; there has been significant growth in the use of rapemeal in animal food and an increase in the use of edible oil.”
“Since 2008 we have seen higher price volatility across these markets. Thanks to the positive impact we have achieved, we believe there is a need for additional financial instruments for hedging price risk. It is important for EU rapeseeed crushers to protect their input and rapeseed costs, and their two main output costs, rapeseed oil and meal, against price risk, which we are offering with this contract. The new Euronext rapeseed complex reaches a new audience of European mineral oil and bio‐diesel participants,”added Lee Hodgkinson.