Executive Summary
The Australian Securities Exchange (ASX) engaged GSX to conduct an independent review of its wheat and barley futures markets, following several years of underperformance in trading volumes, liquidity, and open interest.
GSX combined quantitative analysis of historical trading data with extensive industry engagement, including surveys and in-depth interviews across the commercial and financial ecosystem. This provided a comprehensive view of market dynamics, user behaviour, and structural barriers. The review highlighted that:
ASX grain contracts are robust and well-designed, particularly in their delivery framework
There is a strong and growing underlying physical market
Opportunities exist to further enhance competitiveness, participation, and global relevanceA meaningful share of Australian grain risk is currently managed via offshore markets, presenting a potential opportunity for onshore growth
GSX delivered a practical, phased roadmap to support ASX in:
Reviewing contract size and fee structures to improve cost efficiency.
Enhancing DSP transparency and exploring broader delivery options.
Considering incentive programs to encourage new entrants and liquidity providers.
Partnering with industry groups to deliver education and promote the benefits of domestic risk management tools
Background
The ASX lists futures and options contracts for key agricultural commodities, including wheat and barley. Despite the importance of these products to the Australian grain industry, market performance has not met expectations for several years.
At the same time, the underlying physical market has grown significantly:
Australian wheat production has increased materially over the past decade
Export volumes have expanded
Market sophistication and global integration have improved
However, this growth has not translated into increased derivatives activity on ASX. Instead:
Market participants continue to rely heavily on offshore exchanges (e.g. CBOT, MATIF)
ASX contracts are often used as secondary or niche hedging tools
Participation from diverse groups
ASX engaged GSX to provide:
An independent assessment of whether its contracts remain fit for purpose
A detailed understanding of market limitations and user behaviour
Practical recommendations to improve liquidity, participation, and relevance
The Opportunity
The review identified that the ASX grain market sits within a broader global ecosystem where liquidity tends to concentrate in a small number of established benchmarks.
Within this context:
Liquidity is currently concentrated in select contracts
Some participants utilise offshore markets for certain hedging strategies
There is an opportunity to further align contract design and market structure with evolving user needs
Importantly, the underlying demand for risk management in Australian grain remains strong, indicating a solid foundation for future growth.
What We Did
GSX undertook a comprehensive review of the market, analysing ten years of trading data and benchmarking ASX against leading global derivatives markets. This was combined with direct engagement across the value chain, including producers, merchants, consumers, banks, brokers, and offshore participants.
Through surveys and in-depth interviews, GSX captured both quantitative trends and qualitative insights, building a complete picture of the barriers to adoption and the opportunities for growth.
Key Insights
The review identified several areas where incremental improvements could unlock additional participation:
Liquidity and Participation: Trading volumes and open interest have declined in recent years, with feedback indicating that wider bid–ask spreads and limited market depth are key barriers to broader participation.
Cost Competitiveness: Compared to global peers, ASX grain futures are perceived as more expensive to trade, due to higher execution, clearing, and margin requirements.
Transparency: Stakeholders expressed a desire for greater clarity in the Daily Settlement Price (DSP) methodology and more transparent pricing benchmarks.
Contract Design: The current delivery structure, while effective for some, may not fully reflect the needs of all regions, particularly Western Australia, which represents a significant share of national production.
Education and Engagement: There is an opportunity to further support market participants—especially producers and advisors—through targeted education and industry engagement.
Key Takeaway
The ASX grain market is supported by strong underlying demand and solid contract foundations.
With targeted enhancements and continued industry engagement, it is well positioned to expand its role and develop into a more widely recognised benchmark for Australian grain.
Disclaimer: The views, opinions or recommendations of the author in this article are solely those of the author and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”). ASX makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational
