* CME Group targets big grain exporting region
* Cash-settled futures to tap into swap market
* CME to offer Russian wheat, Ukrainian corn contracts
* To keep older Black Sea futures with physical delivery (Adds detail, quotes from CME, trader)
By Gus Trompiz
PARIS, Nov 13 (Reuters) - CME Group will launch next month Black Sea wheat and corn futures based on Platts price benchmarks to extend its presence in a booming export region.
The cash-settled contracts will begin trading on Dec. 18, subject to regulatory clearance, the exchange said on Monday.
The wheat contract will be based on Platts Russian Wheat 12.5 percent protein FOB (free on board) Black Sea Deep Water daily price assessment.
CME Group launched a Black Sea wheat contract based on physical delivery in 2012 but it has struggled to gain traction and there are currently no open positions.
That contract was based on delivery in designated Russian, Ukrainian or Romanian ports and some traders have said a market based on a single origin might prove more attractive.
“I think it could have a better chance of success than the previous contract with physical delivery, especially among houses trading Black Sea grain who are not based in the region,” a European trader said.
The corn contract will be based on the Platts Ukrainian Corn FOB Black Sea daily assessment.
The Black Sea crop region, which encompasses Russia and Ukraine, is set to extend its export reach further in 2017/18 as Russia shifts a record wheat harvest.
The region’s growing stature on global grain markets has fuelled interest in pricing tools, and S&P Global Platts announced this year a first over-the-counter (OTC) swap trade for Black Sea wheat using its price assessment.
“The market tells us that there is currently a healthy market in uncleared swaps for Black Sea corn and wheat based on Platts’ price index,” Jeffry Kuijpers, executive director for agricultural commodities at CME, told Reuters.
“What we’re bringing to this market is the opportunity to clear those swaps and therefore take away your counterparty risk.”
Like in Australia, where CME this year introduced wheat derivatives based on a Platts price index, the Black Sea contracts will be available for trading via CME’s Globex screen platform and clearing through CME Clearport for off-exchange trades, the Chicago-based market operator said.
The contracts will be denominated in U.S. dollars, have 50- tonne lots, and be tradeable for off-screen deals with a minimum of five lots.
The Black Sea contracts would also offer two settlement periods, whereby 12 whole-month positions and 24 half-month positions are available to trade.
CME opted for the dual calendar after seeing demand both for standard monthly positions and for two-week periods that fit with grain shipment schedules commonly used in the Black Sea region, Kuijpers said.
The first settlement period available would be Jan. 15 for the two-week calendar, followed by Jan. 31 as the first monthly and second fortnightly deadline, CME said. (Additional reporting by Michael Hogan in Hamburg, editing by Louise Heavens and Dale Hudson)