Q1 2022 Ag Update

  • 22 Feb 2022
  • By CME Group

Recapping a year of global growth in the Ags market

The impact of biofuels on Ag products

The drive to reduce carbon emissions and meet the net zero goal by 2050 will see a greater global demand for bioenergy products. The greater usage of agricultural and waste-based feedstocks looks set to play a more significant role if these targets are to be met. These changes are going to bring the energy and agriculture sectors closer with some Ag feedstocks being used in greater quantities to meet energy demand.

Advanced biofuels such as renewable diesel are set to play a much bigger role on the global stage. Renewable diesel, a ‘drop-in’ low carbon alternative to fossil fuels, is considered more versatile than some of its predecessor products. The hard- to-electrify sectors such as shipping, planes and trucks are expected to be the biggest users.

U.S production of renewable diesel looks set to rise sharply as energy firms scale up their output to meet an expected rise in demand in the coming years. Analysts believe that renewable diesel production could treble over the coming years, albeit from a low base.​​​

Source: Powered by QuikStrike

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Record year for Ag options

In 2021, Ag options increased 10% YoY with 60% of options volume derived from options strategies.

Short-term options (Weekly and Short-dated New Crop) have contributed to 11% of all Corn options volume. Ag traders have evolved in how they trade options by leveraging spread trades and short-term options to help define risk.

Other 2021 highlights: 

  • Ag options posted an all-time ADV record of 274K contracts. The Ag CVOL Index hit an all-time high of 46 in June. The dollar-weighted vega value of the Ag complex reached over $200M in May.
  • Corn and Soybean Oil options both had record ADV. Both Corn and Soybean Oil set new market share records (27% of all Corn and 9.4% of Soybean Oil volume came from options). Soybean Oil had a record average open interest of 220K.
  • Weekly Ag options set an all-time ADV record, averaging over 8K contracts a day.
  • C-Cross volume hit an all-time ADV record of 21K contracts, up 36% compared to 2020.

Source: USDA Oil Crops Yearbook

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Stay on top of all agriculture-related news by following the CME Group Agriculture on LinkedIn or by following CME Group on Twitter.

LinkedIn: https://www.linkedin.com/showcase/cme-group-agriculture

Twitter: https://twitter.com/CMEGroup

The rising demand for fertilizer

The Fertilizer suite experienced record participation with average daily volume reaching 319 contracts in September and 175 contracts for the year (+20% YoY).

With heightened natural gas prices, geo-political involvement and logistical constraints brought on by Hurricane Ida, we have seen more participants look to our products to manage their price risk during uncertain times.

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EMEA records

Black Sea Wheat and Corn futures and options traded a record 314K contracts in 2021. Black Sea Corn futures ADV hit 200 contracts in 2021, up 25%. 

The record volume reflects the continued increase in importance of the Black Sea region in global wheat and corn trading, driving growth in number of firms managing exposure to these markets.

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New opportunities to learn

Read our latest piece on the features of Short-Dated New Crop options

In a year of unknowns around COVID-19, growing conditions and exports, producers found an increased need for precise risk management tools. 

Some producers and brokers looked to short-dated options on futures as a way to plan for sudden price swings.

 Read now

Corn and Soybean Webinar with AgResource Brazil

CME Group invites you to attend an online event on Thursday, February 3 on the progress of corn and soybean crops in Latin America.

Join us to hear from Raphael Mandarino, Managing Director of AgResource Brazil, as he highlights the impact of the recent heat wave in Latin America on the crops, specifically in Argentina and Brazil.

In addition, Raphael will discuss the latest yields and production losses, prices, exports, and potential supply in the months ahead.


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All data is at January 6, 2022 unless stated otherwise