A SOUTH AMERICAN soyabean futures contract is to be launched by the Chicago Board of Trade next month.

The world’s leading agricultural futures market hopes to capitalise on growing interest in the Brazilian and Argentinean crop, which is expected to top 85m tonnes this year.

Launched on May 20, it will be physically settled, with delivery points in the ports of Paranagua and Santos, Brazil.

The contract may be useful as an indicator of global oilseed prices, but it has limited relevance to the UK trade, according to trader Mark Smith with Gleadell.

“Everybody looks very closely at the US soyabean market, which sets the tune for the global oilseed market.

“The South American oilseed crop has become increasingly important as they raise the amount produced, so the new contract will have some relevance.

“Personally as a trader, though, the more relevant market for oilseeds is the Winnipeg market, which is directly useful because it trades in oilseed rape.”

Investment funds have been driving the US market recently, but fund managers may find an initial lack of liquidity in the new market a barrier to buying big volumes, Mr Smith added.

Oilseed trader John Thorpe at Centaur Grain welcomed the new contract, saying: “Any market barometers are always useful, especially with the South American weather market.”

But Nick Oakhill, a trader with Glencore Grain, said its relevance was tenuous.

“The CBOT market for soyabeans is only there for us to gauge market sentiment, so the daily correlation of the new contract with what we’re doing in oilseed rape is small, to say the least.”