by Agriwatch –
Brazil’s Mercantile & Futures Exchange (BM&F) will launch a soybean futures contract aimed at China and is in talks with the country’s largest commodity futures exchange about listing the product there as well.
It also shows how China is embracing derivatives markets as a way of protecting against price swings as they ramp up purchases of commodities around the world.
Chinese soybean buyers had recently started investigating how to buy directly from Brazilian soybean producers, rather than having to go to large intermediaries like Cargill, Archer Daniels Midland and Dreyfus, among the world’s largest grain traders, he said. That was spurring interest from China in mechanisms that importers could use to protect such purchases.
Currently, many Chinese buyers either do not hedge, or use soybean futures at the Chicago Board of Trade. The Chicago exchange is launching its own Brazilian soybean futures within the next three months aimed at Brazilian producers.
However, the new BM&F soybean contract would compete directly with the Chicago product as well, Mr Neto said. It is being developed with Rofex, Argentina’s futures and options exchange, and would consist of a blend of features that gave exposure to soybeans, soybean oil and meal, which is mostly used in livestock feed.