In this report
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The rise of short-term options in helping manage risk

Agricultural risk management is evolving with market participants utilizing short-term options to better refine and isolate risk. New Crop Weekly options launched January 23, extending risk management capabilities for Corn and Soybeans. Agricultural short-term options set multiple records during Q1 2023 with record participation. Visit the Agricultural short-term options page to learn more about our product suite.

  • The Agricultural Weekly options complex set a single-day volume record of 57,314 on March 31.
  • Three products set all-time quarterly ADV records:
    • Soybean Meal Weekly Q1 ADV – 849
    •  Soybean Weekly Q1 ADV- 2,493
    • Chicago Wheat Weekly Q1 ADV – 1,452
  • New Crop Weekly options averaged over 500 contracts a day and reached 5K contracts of open interest leading up to the prospective planting report.
  • Short-Dated New Crop Soybean options posted the best first quarter ever with 1.9K ADV.

Livestock derivatives growth continues upward trend

Consistent beef demand, tightening supplies, and a volatile Corn market pushed Feeder Cattle options to achieve a record volume high of 7,472 contracts on Monday, March 8, 2023. 

New Lumber contract building new records

Lumber (LBR) achieved an all-time volume record day on May 3 of over 1,000 contracts traded. The Average Daily Notional volume in April was over $6M with an Average Daily volume of 460 contracts in April. Open interest is now over 5,000 contracts out to Nov 2023. 

Global demand for Palm oil drives record trading activity in Q1

Q1 2023 has been the all-time best quarter for CME Group USD Palm contract with significant client activity. This activity has been driven by factors such as the uncertainty around the biofuel policy in Indonesia and the downward price trend in Soybean oil and energy.

Notable highlights

  • 93,014 Palm contracts traded, up an impressive ~95% QoQ
  • 100% block traded, with constantly active bids and offers
  • Mar 2023 open interest stands at 54,045 contracts, with OI out till Dec 2024
  • Mar ADV is the second highest in history with 1,567 contracts traded daily, which is equivalent to ~901k traded MTD

Price limit rules revisions: Corn, Soybeans, Soymeal, Soybean Oil, Rough Rice, and Oats

CME Group is amending the Daily Price Limits rules for Corn, Soybean, Soybean Oil, Soybean Meal, Oat, and Rough Rice futures effective trade date Tuesday, May 16, 2023 (pending CFTC approval).

Amongst the rule revisions, one amendment allows for initial/expanded price limits to be increased further (by 50%) each time there are settlements at the expanded price limit for two consecutive business days.

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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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