A HEDGING SOLUTION FOR EUROPEAN SUGAR
Euronext today announced that it will be launching a new Sugar commodities futures contract in the autumn of 2016, subject to regulatory approval. Aimed at all the actors of the European Union Sugar ecosystem, the contract will allow the industry to hedge its positions against price fluctuations and anticipate future price movements, just as the Sugar quotas expire in the European market.
The European Union is the third largest sugar producer and the second largest consumer in the world. Following a profound modification in its common organisation of the markets in agricultural products, the EU will abolish sugar production quotas on 30 September 2017. This major reform follows those covering the oilseeds, grains and dairy sectors in the EU over the last two decades, which all resulted in the need for efficient price risk management tools. Within this context, the new sugar contract will allow the EU sugar sector to manage their risk more smoothly in a transparent, regulated and liquid market.
Michel Portier, CEO of European leading Agricultural consultancy Agritel said, “In a context of liberalisation of the European Sugar markets, sugar beet producers will be free to increase their production. Europe will immediately become a net exporter of sugar and the actors involved in the industry will need tools to hedge their risk. This is why we welcome Euronext’s initiative and we are convinced this contract will be a success.”
Lee Hodgkinson, Head of Markets and Global Sales at Euronext, said, “The launch of this new commodity contract highlights our desire to provide hedging solutions to European agricultural sectors as they move into a more liberalised environment. This reflects our continued commitment to position Euronext at the heart of the real economy.”
