Soybean futures prices have reached their highest level in four years due to a lower than expected US crop, South American dryness, and heightened global demand. La Niña has contributed to the driest South American planting season in 40 years and demand from China continues to grow.
These factors helped drive benchmark North American Soybean futures Q4 2020 volumes up 21% YoY, setting an open interest (OI) record of 1.1M contracts on October 22, 2020. The difference in market fundamentals between North and South American soybeans can be seen in the inter-commodity spread across the benchmark contract deliverable on the Illinois River and the new South American Soybean futures contract priced at the Brazilian port of Santos. South American Soybean futures OI has surpassed 700 contracts as customers look to trade the spread between these two contracts.
Watch the video, "Trade The Basis – North and South American Soybean Futures Contracts," to learn how South American Soybean futures can be used to trade the basis across CBOT Soybean contracts.
Source: CME Group
As South America’s role as a global grain exporter grows, keeping up on the latest news and information from the region has become increasingly important. Watch free, two- to five-minute videos of Tarso Veloso, Analyst and Director of Operations for AgResource, discussing the agricultural and economic outlook for the Latin American marketplace.
Since launching on November 9, Pork Cutout futures have achieved an open interest (OI) of 1,070 contracts, 129 average daily volume (ADV), and OI in each of the first nine listed contract months. Options volume has also gained momentum with 158 OI and seven ADV.
Source: CME Group
The introduction of Pork Cutout futures and options provides pork packers, processors, retailers, and those with exposure to pork cut values, a new instrument to hedge pork price risk for specific pork cutout prices.
Agricultural Economist, Ted Schroeder, from Kansas State University, goes into detail on how cash-settled Pork Cutout futures and options can be used to manage the risk associated with hogs and pork production.
Stay on top of all ag-related news by following the CME Group Agriculture Showcase page on LinkedIn or by following CME Group on Twitter.
View the current version and an archive of the Ag Update online at cmegroup.com/education/ag-update.html
Data as of January 4, 2021, unless otherwise specified.
Save time identifying trends. Get free, daily reports sent to your inbox highlighting significant changes in volume, open interest, price, volatility, and skew.
Use the QuikStrike Vol2Vol™ tool to visualize price movements the Ag option markets are expecting in the underlying future. Overlay open interest or volume on top of the expected price movements to better understand how market participants are utilizing Ag options.
Cash-settled Thailand Rice futures are an effective price risk management tool for Thailand and other long grain white rice export markets
Key features of the contract are:
Growing price volatility in the Asian rice market has caused supply chains to shorten to just a few weeks, as market participants struggle to manage exposure to counterparty credit risk. These issues are further complicated by the lack of a hedging mechanism to manage price risk exposure beyond the CBOT Rough Rice futures contract.
CME Group Researcher, Paul Wightman, examines how cash-settled Thailand Rice futures can be used to hedge exposure to Thailand Rice.