13 Nov

Spanish olive oil futures market seeks speculators

By Elena Moya,
Edited by Chris Johnson,

The world’s only olive oil futures market, based in Spain, plans to grow rapidly next year and hopes the increased liquidity will attract large speculators, its general director said on Tuesday.

Ana Fernandez told Reuters she expected financial institutions to join the organisation, based in Jaen, the Spanish province that produces almost half of the country’s olive oil, from next year.

She expects daily traded volume to rise to 400 tonnes — about 400,000 litres — from 270 tonnes a day now.

“That level will attract Spanish and foreign brokers, anybody who has a commodities book,” Fernandez told Reuters.

“An Italian bank is already preparing the paperwork to become a member.”

She declined to identify the bank.

The market, which started three and half years ago, now has around 20 members, including Banco Popular (POP.MC: Quote, Profile, Research) and savings bank La Caixa, which can trade from their screens, and more than 200 clients, mostly farmers that want to fix a price.

A small number of speculators already give life to the market, which negotiates daily volume of about 6.6 million euros ($9.65 million).

The speculative trades are still small, including some of about one or two tonnes — less than the average truck’s container space of 25 tonnes.

“Financial institutions demand liquidity. We aim to have it next year,” Fernandez said.

About 207 daily tonnes were traded last year, compared with 129 in 2005 and 72 in 2004, Fernandez says. The contracts are per tonne.

Fernandez said she had contacted top banks such as Banco Santander (SAN.MC: Quote, Profile, Research), BBVA (BBVA.MC: Quote, Profile, Research) and JPMorgan (JPM.N: Quote, Profile, Research), as well as the London desks of commodities traders.

“At the moment, they’re all waiting, all looking,” she said.

Surrounded by olive groves — Spain produces more than a third of the world’s olive oil — Fernandez wants to settle her market before competitors, such as Chicago’s Board of Trade, decide to emulate her initiative.

“They have the markets, but not the product,” she says. “The only way is forward.”

[Source] Click here

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