Winter futures

Based on the results of two months of work, daily trading volumes in futures for the Moscow Exchange wheat index consistently exceed 1 thousand tons, and open positions reach 2.3-2.4 thousand tons. This allows you to hedge price fluctuations in the grain market. But the figures are noticeably lower than on the world’s leading venues. In addition, private investors are the most active, while agricultural producers treat trading with restraint, including due to the dependence of the futures on the purchase prices of one company.

The second month of trading in settled futures for the CPT Novorossiysk wheat index on the Moscow Exchange ended on a positive note. The trading volume on the day the October contract was executed amounted to 34.6 million rubles. (2.3 thousand contracts, one contract is equivalent to one ton of grain), and the volume of open positions approached 2.4 thousand contracts – close to the maximum reached in mid-September (2.46 thousand contracts). But the total trading volume in October was one third lower than a month earlier – 60 million rubles. against 90 million rubles.

Compared to foreign sites, this is not much. For example, the trading volume on the American CME exceeds 100,000 contracts (135 tons each) per day. The Moscow Exchange assured that they are actively working to revive the segment, including interacting with brokers as part of preparing the infrastructure for connecting participants from “friendly” countries, as well as with a number of banks – to create financial products “to insure the price risks of their clients from agro-food sector”.

The United Grain Company (OZK) acts as a market maker. Since August 2021, it has been holding auctions at the National Commodity Exchange (NTB) for the purchase of wheat on an export basis – CPT Novorossiysk port. As of November 1, the company purchased over 1.3 million tons of wheat for 21.8 billion rubles. In May 2022, we began to calculate a new exchange indicator – the wheat cost index. Now the company daily buys about 4.5 thousand tons of wheat at NTB spot commodity auctions. “An indicator of 50% (taking into account the volume of trading on October 31, 2.3 thousand contracts.— “b”) from the spot exchange market signals an increase in the liquidity of grain futures,” the OGC believes.

The surveyed financial market participants also assess the segment positively. Settled futures for wheat is “a long-awaited benchmark for the Russian grain market,” says Oksana Lukicheva, commodity markets analyst at Otkritie Investments. Contracts are convenient for a wide range of investors due to the non-delivery trading mode, says Nikita Silkin, head of the department of the Internet broker BCS World of Investments. The OZK believes that Russian agricultural producers have got the opportunity to insure themselves against price fluctuations in the world market.

However, so far the tool is of interest not to enterprises, but mainly to citizens who want to get an “allocation to the food market,” says Dmitry Alexandrov, managing director of Ivolga Capital. According to the Moscow Exchange, in September they accounted for more than 70% of open positions, now the share has grown to 90%.

120–250 individuals and only three or four companies hold open positions per day. Moreover, individuals mainly open long positions, while companies open short ones.

Such a situation, according to Mr. Alexandrov, creates risks – without the participation of large agricultural producers, futures may speculatively deviate from real prices for underlying assets due to the mood of private investors, which means that even correct rates may not work. He believes that the development of the segment is possible only through the involvement of agricultural producers.

However, according to Andrey Sizov, the director of Sovecon, participants in the grain market may not be satisfied with the dependence of the futures on the purchase prices of one company. On the Chicago Stock Exchange (CME), the expert explains, the index is formed by the Platts agency based on surveys of transactions from a number of suppliers.

Ksenia Kulikova, Anatoly Kostyrev