New retail scale derivatives options available for growers through StoneX

StoneX will leverage off its subsidiary City Index, a retail trading business offering access to over 6300 markets globally, including shares, indices, commodities and bonds to provide a suite of grain trading products.

The new Australian offering will include major international futures indexes such as the Chicago Board of Trade wheat, Kansas wheat, Minneapolis wheat, Australian Stock Exchange wheat and Winnipeg canola into an easily tradeable format familiar to Australian growers, based on Australian dollars and metric tonnes.

Nick Orssich, StoneX Asia Pacific Ag vice-president said StoneX had recognised a gap in the market.

"There have obviously been hedging products in the Australian market, including our own, for larger players, but what we have been hearing from growers were the difficulties in accessing derivative products suitable for them," he said.

"If you don't bank with the right people you don't get access to a lot of these products, which can be really valuable in risk management."

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"With our new launch with City Index people will be able to sign up for the app in minutes, you can set up a corporate account in a couple of days, we've been really focusing on ease of use."

"From there you can trade as little as a tonne of grain, so for people unsure of using derivatives this can be a way for them to dip their toe in the water."

"It is also a much quicker process than other means of trading derivatives, other models you have to wait to get in touch with your broker and you can be looking at lengthy lag times."

Mr Orssich said StoneX would also be working with the production sector to ensure they were educated in how to best use derivatives.

"Culturally, Australian growers probably have less direct exposure to futures and derivatives than growers elsewhere so we've identified education as something that will be really critical."

He said he hoped Australian grain growers, even those not using the products,would download the app as a price discovery tool.

"We think it is a really quick and easy way for people to keep up to speed with what is happening with the market both here and internationally."

Mr Orssich said there was a definite push to develop a product suitable for growers but added smaller traders would also be possible users.

"We don't think it will be the larger end of town that will use the app, although we anticipate they may download it for use in price discovery, this is definitely targeted at growers and potentially smaller traders."

He said using derivatives could open up significant value for Australian growers.

"You only have to look at last year when basis was up to $200 a tonne below the world market, it is the model of opportunity where you can hedge the basis, I can see when the market blows like that to have a big negative basis in the future more farmers will look to have a hedging strategy in place."