Q1 2021 Ag Update

  • 14 Jan 2021
  • By CME Group

Global soybean market affected by increased demand and low crop production

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

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Agri-Update Latin America

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.

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Pork Cutout futures open interest reaches over 1,000 contracts

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.

White paper: Using CME Pork Cutout Futures to Hedge Wholesale Pork Products

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.

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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. 

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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.

Ag Intel: Data-driven recaps of the Corn, Soybean, and Chicago Wheat (new) markets

Save time identifying trends. Get free, daily reports sent to your inbox highlighting significant changes in volume, open interest, price, volatility, and skew.

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QuikStrike Vol2Vol™ Expected Range Tool

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.

Try the QuikStrike Vol2Vol™ tool

Black Sea futures and options

  • Black Sea futures and options contract volume hit a record annual 314K in 2020 — up 41% on 2019.
  • Black Sea Wheat futures volume ADV reached 1,050 contracts in 2020.
  • Open interest on Black Sea Wheat futures out to December 2021.

Learn more about hedging with Black Sea Wheat futures

Thailand Long Grain White Rice futures are now available for trading

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:

  • Cash-settled, basis Platts Thailand Long Grain White Rice 5% broken FOB Bangkok assessment
  • Available to trade on screen and through an active broker market
  • Price risk can be managed up to 12 months forward
  • Spreading opportunities with CBOT Rough Rice futures

Learn more

White paper: Increasing Volatility Spurs Hedging Opportunities in Asian Rice

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.

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UAN FOB NOLA futures open interest over 300 contracts

  • Since launching on September 21, UAN FOB NOLA futures have reached an open interest of 360 contracts.
  • With the launch of UAN futures, the entire Fertilizer suite is available as futures contracts, improving access for market participants.
  • View the Fertilizer broker list

Explore Fertilizer futures