EU Exchange Launches Malt Barley Futures

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NYSE Liffe, the European derivatives exchange of NYSE Euronext, told Reuters it will launch malting barley futures in the next quarter and expects them to be as popular as rapeseed contracts.

Malting barley, used to produce malt for beer and whisky, crops an annual 12 million tonnes in the European Union, or about 20 per cent of barley output in the 27-member bloc, the rest being used mainly for animal feed.

NYSE Liffe has been working on Paris-based barley contracts since early 2008 in response to demand from grain co-operatives and malt manufacturers seeking to hedge over extended periods, Lionel Porte, product manager at NYSE Liffe, said in an interview.

“There aren’t any futures contracts anywhere in the world at the moment for malting barley,” Porte said, noting the demise of malting barley futures based in Hanover, Germany.

The absence of futures for malting barley had even led some operators to try and hedge with wheat derivatives, given a correlation in the price movements of the two crops, he added.

The contracts will have as delivery points the Belgian ports of Antwerp and Ghent.

Malting barley futures should eventually reach similar volumes to those of NYSE Liffe’s 15-year-old rapeseed futures, which trade daily about 3,000 lots of 50 tonnes each, given the similar size of EU production of the crops, he said.

“The volume that trades on a futures market is inevitably dependent on physical output,” he said, stressing wheat’s status as the main agricultural contract in Paris with some 7,500 lots per session rested on EU production of about 140 million tonnes.

He declined to give short-term targets for barley trading.

The forthcoming barley futures will adopt the same calendar as wheat, starting with a November 2010 contract, although the existence of an August contract, which falls between two campaigns and is virtually untraded for wheat, was under discussion, Porte said.

The launch in early 2010 will mean they will be too late to attract hedging for the new crop, leaving next year as more of a “warm-up” for the futures, he said, adding NYSE Liffe would launch barley futures contracts and options simultaneously.

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