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Ukrainian grain market follows global trend of transparency and liquidity grow.

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First ever BLACK SEA CPT REUTERS FEED CORN SWAP traded between one of the biggest Ukrainian Agroholding named Agroprosperis and international trader Spike Trade AG via Swiss based broker SCB.

The broker Arnaud Saulais confirmed the terms of the trade where Spike Trade AG sold to Agroprosperis SWAP for 10k Ukrainian Feed Corn @ 168,75$ assessed to average BLACK SEA REUTERS CPT FEED CORN price for March delivery 2018.Igor Osmachko, CCO of Agroprosperis (NCH group) and Oleksandr Solovey, CEO of Spike Trade AG confirmed the deal by the phone.This trade represents pure nature difference in philosophy between farms who wants to be always long and traders who take market opportunity to capture trading margin.CPT SWAP is a natural development of Ukrainian grain market that should bring more liquidity and transparency to market and allow world players to participate on first export delivery basis of Ukrainian farmers.Ukrainian grain market characterized by recent huge liquidity grow in supply chain where more then 10 trade companies could move the grain from farmer to international FOB market. As a result farmer is benefiting from main traders’ function in the chain – creation of liquidity. Oleksandr Solovey commented that UKRAINE market needs such CPT SWAP tools first of all for farmers that more familiar with CPT delivery terms and philosophy. In the Ukrainian not ideal logistics environment SWAP contract will allow farmers to capture production margin or prolong their ownership of the goods focusing on spot logistics challenges. That was exactly the reason of price increase on Ukrainian corn vs other origins this year. Farmers were not confident in logistics performance due to lack of wagons and were tend to sell hand to mouth keeping supply chain short of corn. This case is becoming usual in fundamentally heavy weighted corn balances. Believe SWAP contract is the first step to smooth and balance supply chain in Ukraine. Other developed market like US no longer keep price risks with stocks and use other trading tools – benchmarks to separate physical stock from price risk. US farms selling basis, buying options and trade other OTC products in order to manage price risk separately from the stock. That is possible in US thanks to existed futures and option tools – benchmarks traded on CME. Same time risk management and trading strategies functions on the market open the door for consulting services that aimed to increase market competence and reliability.Thanks to competent Reuters price assessment teem, UKRAINE has a benchmark around which market players (traders and farmers) could develop trading tools like CPT SWAP, options etc.

 

 

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