EU: NYSE Liffe to extend trading period of all Paris-based grain future contracts, end its illiquid August contract on malting barley futures

European exchange operator NYSE Liffe said on November, 23 it would extend by one year the trading period of all of its Paris-based grain future contracts to lure more over-the-counter investors by offering them better visibility.

"People look to hedge further out the curve," NYSE Liffe agricultural commodities product manager Nicholas Kennedy said, adding that with only two years open for trading instead of three, the exchange was losing business to the OTC market.

NYSE Liffe, the global derivatives business of NYSE Euronext, also said it would end its August contract on milling wheat and malting barley futures after repeated demands by traders to drop the illiquid contract, which comes near the harvest in big producing regions.

This would mean increasing the number of wheat and malting barley contracts to 12 from 8 currently, while maize contracts would rise to 10 from 7, and rapeseed to 10 from 6 currently.

London-based feed wheat futures, which already have longer trading periods, will not be affected by the change.

The changes are due to take effect in 2012 but there was no date set at this stage, Kennedy told a news conference on NYSE Liffe's agricultural commodities futures and options.

Euronext milling wheat futures have become the most actively traded contracts, taking over London-based cocoa, with a rise of 1,500 percent in the average daily volume since 2006.

NYSE Liffe also said it would extend to its Paris-based products the publication of weekly commitment of trader report (COT), which it started doing for its London-based agricultural commodities products in October.

The COT would show open interest classified between "hedgers", "swap dealers", "money managers" and "other reportable", it said.

NYSE Liffe also announced that it is studying a new rapeseed meal futures contract but said it may not be launched for another two years - the time to decide on technical specifications with industry representatives and clear regulatory proceedings.

"There has been a high demand from the oilseed crushing industry, after crushing doubled over the past 10 years and we saw high volatility in this market, even higher than for soybean meal," Lionel Porte, commodities product manager, said.

He said NYSE Liffe's aim was to launch a "rapeseed complex" such as the soybean one on the Chicago Board of Trade, which would gather seeds, meal and oils futures.

Euronext already has rapeseed futures, which were launched in 1994 and are traded actively. But the rapeseed oil contract launched early 2007 had to be suspended the following year due to a lack of trading volume.

"It did not take off because the conditions were not good. Rapeseed oil was mainly used for biofuel and by then there were massive imports of (U.S.) B99 (biodiesel)," Porte said.

These were countered by EU import tariffs in 2009.

"The (rapeseed oil) contract is dormant for the moment, but we could relaunch it," he said, adding that it would be after the rapeseed meal contract.

25 November, 2011