CME, MGEX launch wheat spread options

by World Grain Staff
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CHICAGO, ILLINOIS, U.S. and MINNEAPOLIS, MINNESOTA, U.S. — CME Group and Minneapolis Grain Exchange, Inc. (MGEX)  announced on March 1 the launch of MGEX-CBOT Wheat Spread Options to begin trading on March 26. These contracts are listed with, and subject to, the rules and regulations of the Chicago Board of Trade (CBOT).

The group noted that MGEX-CBOT Wheat Spread Options are unique hedging tools based on the price differentials between hard red spring wheat futures listed on the MGEX and soft red winter wheat futures on the CBOT, which are the result of fundamental supply and demand factors and varying protein levels between these two distinct classes of wheat.

"For years, market participants have used spread trading strategies to express a point of view about the price differences in these distinct varieties of wheat," said Tim Andriesen, managing director, Agricultural Commodities and Alternative Investments, CME Group. "These cost-effective and unique spread options from CME Group will enable global wheat industry participants to access our deep and liquid wheat markets to manage the risk associated with the price differentials inherent between these classes of wheat."

This adds to CME Group's already broad wheat market offering. Today, customers can access underlying CBOT, MGEX and Kansas City (KCBT) wheat markets through the CME Globex electronic trading platform.

"MGEX is pleased to partner with CME Group in offering market participants another way to access MGEX's high protein Hard Red Spring Wheat (HRSW) contract," Eric J. Delain, corporate counsel, MGEX said. "We expect these spread options will be a valuable risk management tool as a compliment to the MGEX HRSW futures contract."

Three MGEX-CBOT Wheat Spread options will be listed for both open-outcry and electronic trading:

MGEX July – CBOT July

MGEX September – CBOT July

MGEX December – CBOT December

For more information about CBOT Wheat Futures and Options, please visit www.cmegroup.com/trading/agricultural/cbot-wheat-futures.html.



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