CONTAINERISED WHITE SUGAR FUTURES - ICE · PDF fileKEY TRADING CONTRACT TERMS Containerised White Sugar futures will trade alongside the benchmark White Sugar futures contract, with

CONTAINERISED WHITE SUGAR FUTURES TRADING BEGINS JUNE 20, 2016

Developments in the physical market for white sugar exports have stimulated requests for the exploration of containerised delivery procedures as an alternative to the existing break bulk delivered futures. Since the acquisition of the former Liffe softs markets, ICE has been working with the trade and industry to develop a container delivery mechanism for futures contracts.

WHY IS A CONTAINERISED CONTRACT NEEDED?

•  Industry estimates of the total exports of refined sugar in containers range from

60-80%

•  Consumption trending towards purchases in container increments – limited demand

for full vessels

•  Many commercially relevant ports (both at origin and destination) have concentrated

logistics investments to accommodate container shipping

•  Smaller dry-bulk vessel fleet is shrinking globally, especially relative to container

freight availability

•  Containers offer expedited loading and minimize weather-related delays

INTERCONTINENTAL EXCHANGE 2

Estimated shipments from the top five

Exchange-delivered origins

APPROXIMATELY TWO-THIRDS OF EXCHANGE QUALITY REFINED SUGAR EXPORTS ARE SHIPPED IN CONTAINERS


KEY TRADING CONTRACT TERMS

Containerised White Sugar futures will trade alongside the benchmark White Sugar futures contract, with identical quality standards for the underlying deliverable supply.

ALL OF THESE TERMS ARE IDENTICAL TO THE EXISTING WHITE SUGAR CONTRACT

DELIVERABLE SUGAR

White beet or cane crystal sugar or refined sugar of the current crop at the time of loading

QUALITY PARAMETERS Minimum polarisation: 99.8 degrees Maximum moisture: 0.06 per cent Maximum colour: 45 ICUMSA

CONTRACT SIZE Fifty Tonnes

TICK SIZE 10 cents per tonne ($5 per lot)

TRADING MONTHS

March May August October December

FIRST NOTICE DAY Fifteen (15) calendar days prior to the delivery month


KEY CONTRACT TERMS THAT ARE DIFFERENT

The key differences between the containerised and conventional futures contracts are the delivery terms and the list of eligible ports


CONTRACT White Sugar Futures Containerised White Sugar Futures

DELIVERY TERMS

Delivered free on board and stowed in break bulk vessels in accordance with Rule 7 of RSA Rules relating to contracts

Delivered free on board in ISO Containers at a Container Port in accordance Rule 7 of RSA Rules relating to contracts

ELIGIBLE PORTS 94 ports in 43 Countries 20 ports in 17 Countries

INVOICE QUANTITY Contract Weight (50 MT) Net Shipped Weights

CONTAINER PORT LIST

EUROPE MIDDLE EAST, AFRICA, SOUTH ASIA

SOUTH-EAST ASIA

Antwerp, Belgium

Le Havre, France

Hamburg, Germany

Rotterdam, Netherlands

Gdynia-Gdansk, Poland

Felixstowe, UK

Mundra, India

Durban, South Africa

Jeddah, Saudi Arabia

Jebel Ali, UAE

Penang, Malaysia

Port Kelang, Malaysia

Bangkok, Thailand

Laemchabang, Thailand


Buenos Aires, Argentina

Paranagua, Brazil

Santos, Brazil

Buenaventura, Colombia

Acajutla, El Salvador

Puerto Quetzal, Guatemala

AMERICAS

BU

YER

BUYERS NOMINATION (T-14)

BUYER ASSIGNS SUPERVISOR CONTAINERS LOADED OVER RAIL

Seller notifies buyer of loading location to allow buyer to secure supervision

SELLER IDENTIFIES LOADING LOCATION (T-13)

Seller collects the empty containers from the container yard and transports them to the stuffing location

Suitable containers are stuffed after lining the floors and walls with kraft paper

Costs and labour are for the account of the seller

COLLECTION AND STUFFING CONTAINERS RETURNED TO YARD PAYMENT BASED ON B.O.L.


Buyer books container freight and submits nomination in the form of the booking reference 14 days prior to delivery

Buyer has the right to assign a supervisor to jointly oversee the stuffing

Seller returns sealed containers to the yard by the terminal stack closing date

Risk passes to the buyer

DELIVERY TIMELINES S

ELL

ER

Shipping line loads container onto the vessel.

Costs associated with delays or substitutions for the account of the buyer

Shipping Line generates B.O.L.

Documents presented to the Exchange

Payment processed, title transferred and margin returned

NOTICE DAY

Seller’s Delivery Notices submitted to Exchange and Clearing House

BUYER AND SELLER DELIVERY RESPONSIBILITIES


To account for the complexities of delivering sugar in containers at the Seller’s choice of location, the Containerised White Sugar Futures contract has adopted several terms to facilitate efficient deliveries and mitigate risks to the counterparties.

PROTECTIONS FOR BUYERS AND SELLERS


•  Alignment with and reference to RSA Rules for FOB contracts for shipment by containers, a standard and well understood industry standard

•  Curated initial port list to ensure contract performance and market confidence –  history of unobstructed container deliveries

–  expansive list of destination ports served by the shipping lines

–  highly liquid container freight market

•  Controls on Loading rates that can be requested and required –  Buyer must make containers available in sufficient time to allow loading, and sellers may

require a full seven days

–  Buyer may request to load any amount, but may only require ¼ of tender in one week

–  Seller must be prepared to stuff and return to container yard ¼ of tender in any one week

•  Minimum bookings (10 containers) to ensure cost efficiency deliveries

WHITE SUGAR VS. CONTAINERISED WHITE SUGAR FUTURES


CONTRACT TERMS

CONTRACT SYMBOL W CS

CONTRACT SIZE Fifty Tonnes Fifty Tonnes

PRICE QUOTATION US Dollars and cents US Dollars and cents

CONTRACT LISTING March, May, August, October, December March, May, August, October, December

DELIVERY TERMS FOB and stowed in break bulk vessel FOB in ISO containers

DELIVERY POINTS 94 ports in 43 Countries 20 ports in 17 Countries

QUALITY STANDARDS

White beet or cane crystal sugar or refined sugar Current Crop at the time of loading free running of regular grain size and fair average of the quality of the crop Minimum polarisation: 99.8 degrees Maximum moisture: 0.06 per cent Maximum colour: 45 ICUMSA

White beet or cane crystal sugar or refined sugar Current Crop at the time of stuffing free running of regular grain size and fair average of the quality of the crop Minimum polarisation: 99.8 degrees Maximum moisture: 0.06 per cent Maximum colour: 45 ICUMSA

DELIVERABLE GROWTHS Sugar shall be delivered at a port in the country of origin of the sugar or customary port of export

Sugar shall be delivered at a port in the country of origin of the sugar or customary port of export

FIRST NOTICE DAY Fifteen (15) days before the delivery month Fifteen (15) days before the delivery month

LAST TRADING DAY Sixteen (16) days before the delivery month Sixteen (16) days before the delivery month

LAUNCH: JUNE 20, 2016* FIRST DELIVERY MONTH: OCT-16*

*Following the satisfactory completion of applicable regulatory processes


AGRICULTURAL COMMODITIES

ICE became the center of global trading in soft commodities with its acquisition of the New York Board of Trade in 2007. Now known as ICE Futures U.S., the exchange offers futures and options on futures on soft commodities including coffee, cocoa, sugar, cotton and frozen concentrated orange juice. Sugar No. 11 is the benchmark contract for the global sugar market which is one of the world's ten largest agricultural futures markets.

ICE Futures Europe also offers leading softs markets including cocoa, Robusta coffee, white sugar and feed wheat futures and options providing a range of global soft commodity products on the ICE platform. ICE Futures Canada lists the leading canola futures contract, a popular oilseed.

WHY TRADE ON ICE? WHY TRADE ON ICE?

LEADING MARKET FOR COMMODITIES TRADING

INTERCONTINENTAL EXCHANGE

12

theice.com/agriculture

FURTHER INFORMATION

TIM BARRY TOBY BRANDON DAVID FARRELL MATT RYAN

Vice President,

Product Development

Intercontinental Exchange

+1 212 748 4096

[email protected]

Director,

Soft Commodity Operations


+44 207 012 8798

[email protected]

Senior Director,

Global Soft Commodity Operations


+1 212 748 4200

[email protected]

Senior Director,

Ags and Soft Commodities


+1 212 748 4116

[email protected]


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