Traders in the KCBT wheat futures and options trading pits attributed the active trading day to several reasons, the first being the volatile wheat market conditions. During yesterday's session, the KCBT wheat futures contracts for the three lead months traded in a range of 13 1/4 to 15 cents and closed up by 6 1/4 to 7 cents.
It was also noted that there was a significant amount of rollover from the KCBT December wheat options into the KCBT March futures contract yesterday. And, there have been increases in the amount of over-the-counter participation in KCBT markets.
"The rule changes that were implemented last month at the KCBT have made it easier for over-the-counter derivatives participation through the addition of 'exchange for risk' (EFR)," said KCBT President Bob Petersen. "With EFR's, we have a more efficient mechanism for dealing with futures positions in connection with the unwinding of OTC contracts and are seeing an increase in volume as a result."
EFR transactions involve the exchange of futures for over-the-counter derivatives; the new rules became effective on Aug. 5, 2002.
Options trading has seen large volume gains in 2002. Year-to-date volume through Sept. 5, compared to the same time period last year, is posting a 69 percent gain. Options volume thus far this year is 30 percent ahead of total 2001 volume.
Wheat futures year-to-date volume through Sept. 5 is 4 percent ahead of the same time period last year.
The Kansas City Board of Trade, chartered in 1876, is the world's largest futures market for hard red winter wheat. Options give a buyer the right, but not the obligation, to buy or sell a KCBT wheat futures contract at a specified price.
