South American soybean futures see first trade day after launch

New York — The CME South American soybean futures contract, settling on the S&P Global Platts daily assessment of soybeans in Santos, Brazil, saw its first trade on Sept. 22, just one day after its launch.

The CME launched the contract to provide a hedging tool closer to the largest producer of soybeans in the world: Brazil.

"As Brazil has emerged as a leading producer and exporter of soybeans, regional pricing alternatives have become increasingly important for risk management," said Tim Andriesen, managing director of agricultural products at CME Group, in a statement about the new contract.

During the morning of Sept. 22, 78 contracts traded for July 2021 shipment at $405.60/mt.

Platts originally launched the Santos soybean assessment Sept. 4, 2018 to provide transparency in the South American hub, along with physical assessments in China and the US.

Market participants have looked for a means of hedging exposure between US-based futures and production in Brazil, which can represent over 20% of the FOB price.

Platts assessed FOB Santos soybeans for October shipment at $443.70/mt, and for March 2021 shipment at $402.73/mt Sept. 21.

McDonald Pelz, which specializes in agricultural products, brokered the first contract.

"We are honored to broker the first South American Soybean futures trade, as we know this will be a great tool for commercials, institutions, consumers, and producers to hedge their exposure to Brazilian soybeans," said Bobby Pelz Jr, co-founder of McDonald Pelz, in an email to Platts. "This new contract presents the opportunity for many different types of participants to trade this key commodity anonymously, and with mitigated counterparty risk."