Following the Black Sea grain prices allows to effectively hedge risks for market participants — S&P Global Platts

Following the prices of Black Sea wheat and corn allows to effectively hedge the risks for grain market participants, which is particularly topical in terms of the current increase of the share of Black Sea grains on the global market, declared the Senior grain pricing specialist at S&P Global Platts, James Colquhoun during his report within frames of the international conference Middle East Grains & Oils Congress in Cairo, Egypt, on March 11.

The volume of Black Sea wheat on the global market continues rapidly growing, and for 3 recent seasons its exports managed to overcome its main competitors — the grain from the USA and the EU.

According to him, the prices of Black Sea wheat, provided by S&P Global Platts, correlate to the quotations of the European grain on the Euronext stocks exchange at 66.9%, and to the US wheat on СВОТ — 58.7%, which allows reducing the basic risks in terms of wheat trading.

In terms of the correlation index at 50% or below, the risks usually increase, but not amortize at all. In turn, if the index reaches 90-100%, the market provides the “net hedge”. Generally, the prices of wheat on the physical market provided by S&P Global Platts correlated at 97% to the wheat futures of the CME Group, the speaker stressed.

According to J.Colquhoun, S&P Global Platts is one of the leading agencies providing information about the comparative study of prices of agricultural products and the energy market, which reliability allows to become the guideline for many companies, realizing their business activities, and providing the complete transparency in formation of the sales markets.

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