Euronext will this year launch futures and options for rapeseed meal and oil to offer a full suite of rapeseed derivatives to a growing market spanning food, livestock and biofuel sectors, the European exchange said on Wednesday.
Euronext already offers rapeseed futures that have become its second-largest agricultural derivatives market in Paris, after milling wheat. It would be the first exchange to cover all the main products in the rapeseed complex.
This marks Euronext's second attempt to develop rapeseed oil futures, after weak demand put an end to the market only a year following a first launch in 2007. The exchange said demand across the rapeseed complex was much stronger now.
"World production of rapeseed has grown by over 80 percent in the last 10 years; there has been significant growth in the use of rapemeal in animal food and an increase in the use of edible oil," Lee Hodgkinson, head of Euronext's Markets and Global Sales, was quoted as saying in a statement.
Rapeseed meal and oil are produced when rapeseed is crushed.
The exchange expects to launch trading in the second half of the year after finalising the specifications of the contracts, Lionel Porte, senior manager commodity derivatives product development at Euronext, told Reuters by telephone.
Scepticism
European traders were sceptical about short-term prospects given the failure of the previous rapeseed oil contract and the difficulty of getting new agricultural futures off the ground.
"The problem with these markets is liquidity. You do not get liquidity without the big boys and the big boys are not interested unless there is liquidity," a cash broker said.
Despite its strong growth, the existing rapeseed futures remained a relatively shallow market compared to wheat and driven by a small number of big operators, traders noted.
"It could provide some visibility on rapeseed margins," a futures broker said. "But for now we haven't had any customers saying they were interested in having meal or oil contracts."
Euronext had responded to interest from animal feed makers and to the maturing of the mostly rapeseed-based European biodiesel sector since the demise of the earlier rapeseed oil contract, Porte said.
It also hopes to attract rapeseed operators from outside Europe who often hedge against soybean derivatives in Chicago, he said, citing rapeseed exporters in Canada and Australia.
Contract specifications such as delivery points would aim to reflect the physical markets, Porte added, noting Paris rapeseed futures were initially quoted in German marks in the 1990s in view of the importance of Germany's oilseed sector.
The existing rapeseed futures have seen growth of 67 percent in traded volumes over the past five years and in 2013 an equivalent of 93 million tonnes of rapeseed was traded, Euronext said, representing more than four times annual rapeseed production in the European Union.
Euronext's Paris-based agricultural futures are part of continental European activities that ICE plans to spin off in a share listing after its takeover of NYSE Euronext last year.
