Redefining an efficient global wheat trading system: the Black Sea futures

Diplôme Master Redefining an efficient global wheat trading system: the Black Sea futures eng 2024-08 2024-08 author Schiltz Victoire Jeanne Faustine 411777 director Kunda Eugène 830544 60 The Black Sea region has long been recognized as an essential hub for grain production and trade, with a significant focus on wheat. Historically, this area has specialized in agriculture, with Russia playing a crucial role. During the Tsarist period, significant investments were made in the railway system, bolstering Russia's position as a leading grain exporter until the late 1880s. Today, Russia continues to dominate the region's wheat exports. According to the latest WASDE report, Russia's wheat exports for the 2024-2025 marketing year are projected to reach 48 million metric tons (MT), compared to 21 million MT from the United States and 35 million MT from the European Union. This represents approximately 25% of the global wheat export market. These figures highlight Russia's significant influence in the global wheat market, especially within the Black Sea region. The region’s traditional role has been primarily cash-oriented trading, characterized by opacity and inefficiencies due to the flat cash pricing system rather than a basis system. This lack of transparency complicates market visibility and fair pricing, creating challenges for effective risk management. To address these issues, Black Sea Swaps and futures were introduced by S&P Global and the CME Group in 2017. These cash-settled contracts aimed to provide better hedging efficiency and price visibility. However, the onset of the war between Russia and Ukraine in 2022 led to a significant decline in open interest and trading volume for these products. The CME Group also attempted to introduce physically settled Black Sea wheat contracts, with designated delivery points in Russian, Ukrainian, and Romanian ports on the Black Sea. However, the project struggled to gain traction as market participants showed little interest, largely due to the complexities of managing multiple delivery points under different regulatory frameworks. The general issue revolves around the opacity of the cash market and the need for financial tools like Black Sea futures to enhance market transparency and efficiency. This study seeks to assess the ability of Black Sea futures to return to the market and evaluate the potential for the Black Sea region to evolve into a financial hub for grains. Trading Wheat Black Sea Region Futures Swaps Dewey 330/650 Msc, Master's degree of Commodity Trading Grade: 5.75 / 6 9 Faculté d'économie et de management S false 1dd68d3d-cc6b-4859-a2c1-2490e57fac9b Master thesis Public Master's_thesis_-_Victoire_Schiltz.pdf 13543381 application/pdf 0467541938b29ee2f81c9925fbe43004017eabe9bdc181498444ef06a6af7bc5 openAccess Faculté d'économie et de management

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Schiltz, Victoire Jeanne Faustine

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