World Grain - June 2015 - (Page 106)

FEATURE TRADERS UTILIZING EXCHANGES MORE THAN EVER M arket participants have coped with the greater volatility of grain prices during recent years by stepping up their hedging activity. Both sellers and buyers of cereals and oilseeds have increased their use of exchange-traded futures and options contracts as risk management tools to such an extent that many exchanges have repeatedly experienced record daily and annual volumes. Nevertheless, importers of wheat, maize or soybeans often still allow their larger multi-national suppliers to provide the hedge for them when the deal is made. This is "like showing the other player your hand when playing poker," maintains Craig Sielaff, senior vice-president at RJ O'Brien, a Chicago, Illinois, U.S.-based future commissions merchant that is a major independent broker of futures contracts for commercial agriculture. "If the trader always knows your position, you are at a disadvantage when negotiating with him." Some of the leading futures exchanges are venerable institutions with their roots in the 19th century. However, in the last few decades a number of new commodity futures exchanges have started up offering cereals and oilseeds contracts, most notably in China. Many of the older exchanges have merged with others, particularly securities exchanges, and established special linkages with the newer ones. Between the old exchanges and the new ones, a large number of new agricultural commodity contracts 106 by David McKee Grain market participants are coping with greater volatility by increasing hedging activity have been created in the past two decades. Most of futures bourses were originally established to facilitate trade in agricultural commodities, but volumes in energy, minerals, and currency contracts now far surpass agriculture on most of them. The close to 30 million energy contracts on the world's largest exchange, Chicago Mercantile Exchange (CME Group), are over triple those for agriculture. Financial derivatives like interest rate futures are also important. Each futures exchange, no matter how large, tends to specialize in certain commodity contracts in which it has a competitive advantage due to local production and better market knowledge and data. A roadmap is useful. NORTH AMERICA By virtue of its acquisition of Chicago Board of Trade (CBOT) in 2007, CME Group is the oldest and still the largest June 2015 / World Grain /

Table of Contents for the Digital Edition of World Grain - June 2015

World Grain - June 2015
Table of Contents
From the Editor-in-chief - Flour output data points to eating trends
Calendar of Events
News review - Ceremony marks opening of Whitewater Mill
ADM plans extensive improvements at Argentina port
Dangote Flour Mills hurts Tiger’s earnings
GrainCorp Oils increasing oilseed crushing capacity
Noble Agri appoints former ADM executive as CEO Jansen
Hovis names new CEO
Southern Africa nations facing food shortage
EBRD provides loan to Turkish edible oil producer
Gruma full steam ahead on European expansion
Oilseeds, grains push Wilmar earnings up 49%
GrainCorp earnings drop on smaller crop
ADM makes management appointments in key areas
ADM earnings surge on oilseed crush margins
Bunge returns to profit on soybean crushing
GrainCorp plans upgrades at 13 sites
Grain Market Review - Rice
Country Focus - Argentina
Technical Profile - Crustless pan bread favored in Argentina
Feature - Bridging a Gap
Feature - Chinese Reforms Creating Market Uncertainties
Feature - Investing in Food Security
Feature - Grain Storage and Handling Projects
Feature - IAOM Conference 2015
Feature - China, currency impacting markets
Feature - A new plan for Egypt
Feature - Team approach to marketing for Canadian grains
Canadian wheat customers share their experiences
Feature - IAOM MEA District Conference & Expo
Feature - Traders Utilizing Exchanges More than Ever
Supplier News
Product Showcase
World Grain Archive
Advertiser Index

World Grain - June 2015