Euronext is to launch the first rapemeal and rapeoil
derivatives to provide investors as far as Australia and Canada an alternative
to relying on soy alternatives which are only partially correlated with rape
The exchange said it would in the second half of 2014 offer rapemeal
and rapeoil futures and option, seven years after a previous attempt at a rapeseed oil contract, which foundered after a year because of weak demand.
Euronext has had more success with its rapeseed contracts, launched 20 years ago, and which the exchange said had "seen significant positive momentum",
with futures volumes soaring 67% over the past five years.
The rapeseed contract traded 1.9m lots last year, equivalent
to 93m tonnes of rapeseed – four times the demand by the European Union, the
world's biggest consumer of the oilseed.
However, growing price volatility has made this contract
alone inadequate to cover the full rape market, with futures in soy products,
which are traded in Chicago, only partially correlated in pricing terms with rapeseed-based
'A better hedge'
"Since 2008 we have seen higher price volatility across
these [oilseed rape] markets," Euronext said, a factor which had supported the "need
for additional financial instruments for hedging price risk".
Lionel Porte, in charge of market development for
agricultural products for Euronext, said that there was "real demand from the
feed industry, from animal feed compounders" for rapemeal derivatives.
"There is also demand to be able to hedge for the energy
sector, mainly for groups making biodiesel," of which rapeoil is a major
With Europe relying on imports of canola, the rapeseed
variant, from Australia and Canada, the contracts will be of use to "guys in
Australia and Canada too", Mr Porte told Agrimoney.com.
"It is going to be a better hedge for them than relying on
soy contracts," as many do currently.
Indeed, differences between moves in prices of soy and oilseed
rape-based equivalents will provide "opportunities to arbitrage between the two".
The smallprint of the new contracts, such as delivery
details, have yet to be worked out, although it will be listed in Paris, and is being developed through "brainstorming"
sessions, Mr Porte said.
"We are still in discussion with working groups of market
participants throughout Europe."
The launch was welcomed by industry leader Alain Brinon, who
said that the launch represented "an important initiative for the industry as
it provides a clear response to the high volatility we have seen in rapeseed
"Furthermore it allows the industry to hedge their entire
purchase and output chain," said Mr Brinon, president of the GTOM industry association,
and vice-president of the Onidol national oilseeds organisation.