CME Mulls Western European Wheat Contract Amid Euronext IPO

Jun 09, 2014 1:45 pm ET

(Updates with futures price and volume in sixth paragraph.)

June 9 (Bloomberg) -- CME Group Inc. is exploring opportunities in western European wheat, said Tim Andriesen, the Chicago-based company’s managing director of agricultural commodities and alternative investments.

CME may consider starting its own contract or developing a partnership with the new owners of Euronext NV after its initial public offering, Andriesen said today at a discussion with media in London. Intercontinental Exchange Inc. said May 27 that it’s planning an IPO for Euronext, which operates the Paris-listed milling wheat contract, in the second quarter after it sells part of the exchange to a group of European financial institutions.

“We’re looking at where are opportunities for us to be more involved in the European markets, and in particular the European wheat market,” Andriesen said. “We have spent a significant amount of time talking to European market participants to try to understand where the right place for us to be is.”

Andriesen said CME probably won’t buy the Euronext wheat contract.

“We would never rule anything out, but I wouldn’t see that as something that would be our first choice,” he said.

Milling wheat for November delivery fell 1.2 percent today in Paris to 190.75 euros ($259.21) a ton, down 6.7 percent this year. Euronext milling wheat had aggregate trading volume of almost 30,000 contracts on June 6, while wheat volume on CME’s Chicago Board of Trade was at about 128,000 contracts.

CME also is considering making changes to its Black Sea wheat contract, which has experienced little volume since trading began in June 2012, Andriesen said. The exchange said in April that it would delay listing new contracts. Volume has been affected by “a very challenging political environment,” Andriesen said. The contract has delivery locations in Romania, Russia and Ukraine, including at the Port of Sevastopol in Crimea.