Borsa Istanbul – Turkey’s main stock exchange – and Konya Commodity Exchange launched a cooperation deal on wheat future contracts on Thursday.
Speaking at a signing ceremony Turkish Prime Minister Ahmet Davutoglu said the cooperation would be a historic step in the country and Turkish economy would benefit.
The deal covers the liquidity of physically delivered future contracts with grains, especially wheat.
“Because Borsa Istanbul is directly connected to the London Stock Exchange, so Konya, Istanbul and London, Konya, Istanbul and New York are becoming integrated… it is impossible to sustain an economy which no connection to international markets,” Davutoglu said.
Davutoglu said that legal arrangements will be made in the first half of the year to launch commodity exchanges in the country.
The Prime Minister also said that the state will transfer all grains warehousing activities to the private sector.
Investors expected to show interest in wheat future contracts
Borsa Istanbul said: “The goal is to increase the liquidity of physically delivered future contracts with grains and especially wheat as the underlying asset and, in this way, to provide a risk management tool for the producers, traders and real sector companies.”
Borsa Istanbul pointed out that national and international investors are expected to show keen interest in the wheat future contracts to be launched as part of this cooperation agreement.
“Wheat future contracts with physical delivery will be launched for the first time in Turkey, which would provide increased international prestige and market depth to Turkish capital and commodity markets and a low-cost financing alternative to producers,” a Borsa Istanbul statement statement read.
The agreement also covers sharing data and cooperation in surveillance operations between the two exchanges.
Konya, in central Anatolia, is Turkey’s largest province. It supplies 11 percent of bread wheat, 25 percent of durum wheat, 14 percent of barley in the country, according to Turkey’s agriculture ministry.