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30 Jun 2020

BUCE eager to introduce forward contracts for agricultural products

BUCE eager to introduce forward contracts for agricultural products
An archive photo

MINSK, 30 June (BelTA) – The Belarusian Universal Commodity Exchange (BUCE) is working on the introduction of forward contracts for agricultural products traded via the mercantile exchange, BUCE Press Secretary Roman Yaniv told BelTA.

The spokesman said: “Our goal is to enhance the effectiveness of management of financial flows of agricultural enterprises and smooth out price hikes for agribusiness products. The key peculiarity of a forward contract is that the selling price is specified when the exchange deal is made while the actual goods have yet to be delivered at some future time.”

BUCE analysts believe that forward contracts will be popular with Belarusian agricultural producers since they will allow the farmers to more properly build a selling strategy and accelerate the turnover of merchandise. In particular, it will be possible to sell grain before the sowing campaign begins, thus addressing the shortage of floating assets.

The mercantile exchange already uses some parts of forward contracts. For instance, timber can be exported via long-term contracts, with goods delivered over the course of the year once they are made. Truth be told, the contract usually allows adjusting the price depending on quarterly exchange quotations. Forward contracts allow no such thing: the price remains unchanged for the duration of the contract.

The public joint-stock company (OAO) Belarusian Universal Commodity Exchange was established in 2004. The first trade sessions took place in June 2005. BUCE is one of the largest mercantile exchanges in Eastern Europe. Its key function is to assist Belarusian companies with exporting their products and assist foreign companies with entering the Belarusian market. The commodity exchange facilitates trade in metals, timber, agricultural products, and a broad choice of industrial and consumer goods.

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