Romania boasts one of the biggest foreign currency markets in the region, with 36m-euro deals per month, but lacks a wheat, corn or oil market, despite being amongst Europe's top producers of these commodities. Deals with grain or oil are conducted outside the Romanian Commodities Exchange (RCE), an institution created eighteen years ago to organise these markets. Why?
The new RCE chairman, Radu Popa, now reformulates all the promises of the old RCE management, which, for ten years, had been pledging to create a grain and oil market, but to no avail.
"The target for 2008 is a 1bn-euro deal volume, 150% higher than in 2007. We are focusing on specialised trading pits, mainly on energy products and we also want to develop the grain trading pit," says Popa.
Despite its high agricultural potential, Romania does not have a grain exchange. The grain trading pit, set up in 2006, hosted deals no higher than 20m euros, which accounted for only 7% of the overall deals sealed on RCE.
Corn, wheat and sunflower are not traded on RCE, but rather on agricultural websites. What is keeping grain sellers away from a commodities exchange? "We haven't heard of this alternative. We sell our commodities directly from the cultivated land to save on warehousing costs," a seller of 600 tonnes of grain from the 2008 crop told ZF. Businessman Sorin Stoica of Cluj states he has two million tonnes of wheat besides other commodities. "(...) I haven't resorted to the RCE as there are many websites where I can find buyers. I'm not thoroughly acquainted with RCE procedures, they have not contacted us, yet, but I'm not ruling out a possible collaboration. In setting prices, we look at quotes on the London commodities exchange".
Popa maintains the grain exchange does not have a favourable operating framework, yet. "(...) The state has to get involved by providing the legal framework, by licensing deposits and issuing the Recipisa Warrant (...)" explains Popa.
The problem is that the same reasons have been quoted for years by the former RCE management, too. The RCE was set up in 1992 and run until early this year by engineer Mircea Filipoiu.
The most traded commodities are energy products, which account for 93% of the traded volume so far. Popa says the infrastructure materials the state can acquire through tenders are now part of the exchange's core business. The state is RCE's most important client, as public companies and state institutions have to buy through the exchange. The Transport Ministry is the biggest contractor and the Defence Ministry is also an important buyer.
RCE in 2007 generated turnover worth above 3m euros, way above the 600,000-euro value of 1999, but less than in 2004, a peak year, when the exchange reached 3.8m-euro turnover. The traded volume dropped from 1.3bn euros in 2004, to 400m euros in 2007.
RCE
Has 80 employees, up from 75 employees in 2004 and 50 employees in 2001
In 2007 generated turnover worth above 3m euros, way above the 600,000-euro value of 1999, but less than in 2004, a peak year, when the exchange reached 3.8m-euro turnover
The traded volume dropped from 1.3bn euros in 2004, to 400m euros in 2007
Is a joint stock company and has 114 shareholders, with each member holding no more than 5%
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