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Agricultural futures and options thrive with a strong start to the year

Strong growth in Agricultural futures and options continued from 2023 into Q1, giving traders more ways to manage risk across their portfolios. Average daily volume (ADV) was 1.6M contracts, surpassing the 2023 Q1 ADV by 15%. This trend appears to be continuing, with this month already on track to be the second highest April ever for futures and options ADV.

Agricultural options on the rise with record quarter

Agricultural options closed Q1 with the best quarter ever, averaging over 337K contracts per day.

Continued growth in volume and open interest can be seen across a number of Agricultural options products such as Soybeans, Livestock and Short-Dated New Crop options. This upward trend shows how clients continue to use options to manage ongoing risk.

Are you missing out on soybean market opportunities?

One of the most common spread trades in the soybean market is the crush spread. The crush spread is the difference between the value of soybeans and its byproducts like meal and is considered a gauge of the potential profit margin for soybean processors. Learn about soybean crushing with our recent whitepaper.

Futures and options on Soybeans, Soybean Meal and Soybean Oil – as well the Soybean crush – provide a means to manage this risk as well as to take advantage of potential profit opportunities. 

Price uncertainty in Livestock markets spurs increase in risk management activity

Supply fluctuations, production costs and anticipated seasonal demand are contributing to price uncertainty in the Livestock markets. That, in turn is, driving more trading activity across Lean Hog and Cattle products as producers and Ag traders seek to manage risk:

  • Lean HogsOperational improvements have participants turning to futures and options to manage price uncertainty, with ADV of 81,018 contracts and open interest of 714,213 contracts moving towards 2019 highs.
  • Feeder CattleProducers have found hedging opportunities, pushing ADV in Feeder Cattle futures and options to a combined all-time high of 24,361 contracts.
  • Live CattleParticipants are using futures and options to express their views on price levels, ADVs to  97,797 contracts – another quarterly record high.

Livestock Price Index data available now on CME DataMine

Take advantage of complimentary access to CME Group Livestock Price Index text file data and related files via CME DataMine, our self-service historical data platform. These files were added to DataMine starting in mid-February to give customers an alternate way to access equivalent files ahead of April 27, the date when the files will no longer be available via our FTP site.

Get more details about these changes in our FAQ.

Lumber future and options see a surge in liquidity

Lumber futures (LBR) surpassed 10,000 open interest in Q1, with OI out to November 2024. Lumber futures ADV was over 900 contracts in February 2024 and 1,000+ March MTD, and we are consistently seeing 1 – 3-tick wide markets ($13.75 per tick).

The average daily notional volume in February was over $15M or 25M+ board feet and over $17M March MTD.

Futures ADV is up by 700% YTD followed by an increase in options by 130% YTD.

Market participants continue to spruce up their risk management strategies using Lumber futures and options, contributing to this overall growth.

A new way to manage fertilizer risk: Urea options

Capitalize on enhanced risk management capabilities with new options on Urea futures. Additionally, the physically delivered futures contract now settles to daily (rather than weekly) Profercy and ICIS price assessments, to help better reflect price changes in the dynamic fertilizer market.

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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