Euronext NV is considering expanding its commodities business with new grains futures. The bourse, whose commodities contracts are traded in Paris, is studying the possibility of adding European durum-wheat and feed-barley futures, Head of Commodities Nicholas Kennedy said. The contracts would be cash-settled and based on assessments by price reporting agencies.
The move comes as cash-settled futures are becoming more popular in a market that has historically been dominated by physical delivered products. That’s partly because traders aren’t at risk of having to take or make deliveries. CME Group Inc, the world’s largest derivatives exchange, last year started Black Sea wheat and corn contracts based on prices published by S&P Global Platts.
“It’s still very much a work in progress,” Kennedy said in an interview on Thursday in the town of Beaune in eastern France. “The market is telling us what they want, what they need and we are looking at how it can be done.”
Euronext is in talks with various price reporting agencies, but hasn’t yet signed any agreements to use specific prices for contracts, Kennedy said. The assessments would have to be compliant with International Organisation of Securities Commissions principles, he said. The exchange already offers physically delivered contracts for corn, milling wheat and rapeseed products.
Cash settled: While cash-settled contracts based on prices from PRAs are new in agriculture, bourses such as CME and Intercontinental Exchange Inc already clear thousands of energy contracts based on prices by Platts, Argus Media Inc and ICIS.
Platts entered agriculture in 2012 after buying sugar and biofuels researcher Kingsman SA and has since expanded into grains. Former Platts employees recently started AgriCensus to assess grains and oilseeds prices. Euronext is also bolstering its existing grain contracts by rolling out a plan to introduce a system of warrants for its corn and milling wheat contracts. 
Kennedy said the exchange is still waiting for a change in French law before introducing the warrants, which give holders the right to receive a fixed amount of the physical commodity.
“The warrants will be a game changer as they will allow for inventory financing and will facilitate the delivery process by enabling a swap of delivery locations,” he said.
In addition, the bourse will announce a new delivery point for corn futures by month-end, Kennedy said. He declined to name the port, but said Euronext is looking at the Dunkirk to Amsterdam area and it will be valid for deliveries from November 2019. 
The bourse is also looking at more delivery points traditionally used for imports. That will allow traders to bring grain from other European countries such as Romania to be delivered via the Paris contracts.
Euronext is also looking at introducing basis contracts, he said. Those would be the difference between cash prices at ports such as Rouen, Dunkirk and La Pallice and futures traded on the bourse.