First liquid nitrogen futures market launched

Euronext, a European stock exchange based in the Netherlands, has confirmed the opening of, what it claims to be, the first physically-deliverable futures contract for UAN-30 nitrogen solution.

The first deliveries of product are due to take place at the end of March next year.

Euronext already provides futures options for a range of agri and food commodities including wheat, rapeseed, wood pellets and butter

UAN-30 combines both urea and ammonium nitrate. In essence, Euronext will offer a physically delivered future traded in euros and backed by partners across the entire fertiliser supply chain, from producers and traders through storage terminal operators to cooperatives.

The delivery point will be in Rouen (France), a major trading area for fertiliser imports as well as for crop exports such as wheat. Clearing of the contract transactions will be handled by LCH S.A, an internationally registered finance company.

The initial expiry calendar has been set for March, June, September and November over a two-year horizon, reflecting the seasonal pattern of sowing, manuring and harvesting  for different types of crop.

Olivier Raevel, Head of Commodities at Euronext, said that nitrogen solution futures’ contracts are intended for the whole fertiliser industry and its end-users.

They will be of particular interest to co-ops and are designed to meet the needs of an industry that is already familiar with instruments for hedging price risk in commodities.

“We are confident that this new contract will be a success and are keen to continue offering innovative solutions to our clients in this sector.”

AHDB analysts believe that the new service will be of interest to farmers, given that each contract comprises 30t of product.

This will make each transaction more viable to adopt from a quantity perspective. In turn, this should help producers shield their businesses from fluctuations in input prices.