Wheat: Who is betting on the rise or fall in the price of wheat, rapeseed or maize in Europe?


(BFM Bourse) – Over the period 2018-2021, commercial companies played a leading role in the European contract market for wheat, corn and rapeseed, reveals a study by the Autorité des marchés financiers. The invasion of Ukraine by Russia has reshuffled the cards a bit, but temporarily.

The Financial Markets Authority (AMF) analyzed the reporting data of players operating on the main agricultural commodity derivatives market in Europe, under its supervision, Matif. The AMF recalls that trading platforms are required to provide regulators with the positions held by each participant. On this basis, the stock market watchdog analyzed the profile of the categories of participants in the wheat, corn and rapeseed markets of Matif (Euronext) that it supervises.

Among the main findings, the study shows that, over the period 2018-2021, commercial companies played a preponderant role in the European agricultural commodity derivatives market, on both close and longer maturities: on the Matif wheat contract, a reference for prices in Europe, they represent a daily average of nearly 57% of open positions.

By way of comparison, this category of participants represents only 23% of open positions on wheat contracts in Chicago, recalls the AMF, an essential market place for agricultural contracts where, on the contrary, financial players are by far the majority in proportion and in number.

In addition, on the Matif side, 62% of the futures positions of commercial companies are declared as corresponding to an activity of hedging the risk of price variation on grains. Indeed, notes the AMF, this category of players on the wheat market is almost always a net seller (selling positions subtracted from buying positions), which means that the positions taken by commercial companies generally serve more to guarantee a price sale and therefore protect them more from a potential fall than from a rise.

The influence of the Ukrainian conflict on the Matif

On the occasion of this study, the AMF also examined the evolution of the structure of the market since the invasion of Ukraine by Russia on February 24, 2022. It was more particularly interested in the possible impact the increase in asset deposits required by clearing houses as soon as a position is opened (initial margins) and the possible influence of financial players on the rise in prices.

Over the period February 24-June 1, 2022, it appears that the number of buy or sell contracts held by participants (called the open position) continued to grow despite the increase in the initial margins required by the room. compensation to deal with price volatility. This increase in margin calls does not therefore seem to have deterred participants from entering the market, notes the study.

The proportion of financial players in positions increased after the Ukrainian invasion, especially during the first 3 weeks of the conflict, but it then stabilized and the share observed on 1 June was close to its level on the same date in 2021, around 50%.

Sabrina Sadgui – ©2022 BFM Bourse



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