Now You Can Trade Black Sea Wheat

After Russia’s ruinous 2010 drought, Leo Melamed read a newspaper story that quoted Vladimir Putin saying he wished there had been a way to insure the wheat harvest. “I said, ‘Wait, I know how to insure a crop,’ ” recalls Melamed, chairman emeritus of CME Group, the world’s largest futures exchange. That was the beginning of CME’s 18-month effort to develop its first futures contract on an Eastern European crop.

When negotiations with Russian officials stalled, CME Group shifted its efforts to Ukraine. In May 2011, the exchange signed memorandums of understanding with the Ukrainian government and the Ukraine Futures Exchange. “The Ukrainians wanted to be first, they were ready to move,” Melamed says. On June 6, CME Group will start trading in a Black Sea wheat contract on its electronic network, giving investors, producers, and companies that buy grain a chance to lock in prices or speculate on them.