CBOT Fertilizer Suite FAQ

CME Group launched fertilizer derivatives in late 2011. As of June 2019, the exchange will offer six recently launched Fertilizer futures contracts and four Fertilizer swaps contracts:

• Urea (Granular) FOB US Gulf futures
• Urea (Granular) FOB Egypt futures
• Urea (Granular) CFR Brazil futures
• Urea (Granular) Middle East futures
• UAN FOB NOLA swaps
• DAP FOB NOLA futures
• MAP CFR Brazil futures

Due to evolving market conditions, two Fertilizer swaps – Urea (Granular) FOB US Gulf and DAP FOB NOLA – will soon be removed from the product offering. No existing open interest will be impacted.

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Wide price swings for fertilizer products highlight the need for instruments that provide risk management. Fertilizer futures and swaps represent valuable tools for managing forward price volatility and reducing counterparty credit risk.

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Cleared swaps and futures contracts trade in a similar manner. However, the designation of swap requires that margin money be held in a separate account from futures margin, which creates additional work for futures commission merchants (FCMs). This has limited participation in cleared swaps by several large, agriculturally-focused FCMs. Conversion to futures contracts provides greater market access for a larger segment of the industry.

Futures contracts can be traded via CME Globex (the central limit order book) or privately negotiated via a block trade. Block trades can be negotiated through brokers and submitted for clearing via CME ClearPort or CME Direct. Cleared swaps can only be submitted for clearing via CME ClearPort.

For assistance in finding a broker, please refer to our Fertilizer Broker Directory.

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Fertilizer swaps are an eligible related position component of an EFR with Fertilizer futures, provided that the transaction is executed in accordance with Rule 538 Exchange for Related Positions and the associated Market Regulation Advisory Notice.

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There is no physical delivery for any of the Fertilizer contracts. The contracts are financially settled against price assessments compiled by ICIS and Profercy, two widely followed industry publications, that enable participants to separately manage price risk and physical supply concerns.

The final settlement price for each contract is based on price assessments published weekly each Thursday by ICIS and Profercy during the contract month. For each set of weekly data published by ICIS and Profercy, comprising both a high and a low price from each source, the highest overall price (or in the case of multiple prices, one of the highest prices) and the lowest overall price (or in the case of multiple prices, one of the lowest prices) shall be removed from the data set. The arithmetic average of the remaining data points is calculated as the weekly average price.

The final settlement price is the arithmetic average of the weekly average prices determined from price assessments published during the contract month.

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Cash price quotations are based on information gathered from a wide cross‐section of the market, comprising consumers, producers, traders and distributors.

For more information, visit:
https://www.icis.com/explore/commodities/fertilizers/
https://www.profercy.com/

The methodologies employed by ICIS and Profercy for nitrogen and phosphate products can be found on CME Group’s fertilizer home page.

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End‐of‐day settlement prices are published for contracts with open positions. Settlement prices can be found along with aggregated clearing volume and open interest in the Daily Bulletin or on the fertilizer landing page.  Block trades, posted bids, offers, and screen trades are all viewable on CME Direct.

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Fertilizer futures and swaps are subject to both position limits and position accountability. Position limits are applicable for each market participant in the spot market. This limit is in place during the last three trading days prior to expiry. For any month outside of the spot month, position accountability is in place. Positions that exceed position limits are a rule violation while positions that exceed accountability levels are not a rule violation and simply allow Market Regulation to ask the participant to provide information relating to the position. Position limits and accountability are as follows:

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Yes, clearing member firms are required to provide CME Clearing with information on all customers and house accounts that hold positions of 25 contracts or more for any delivery date. Additionally, any futures trade submitted as a block needs to be reported to Market Regulation within 15 minutes of execution.

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View CME Clearing fees

Brokers may have additional fees that are not included in the exchange’s fee schedule.

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There are margin offsets available between Fertilizer products. However, for any offset between a cleared swap and a future product, futures would have to be moved into the swaps account by the clearing firm.

Get margin information.

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