Open interest in the KCBT wheat options has been climbing steadily for the past month, continually setting new records. As of the close of the market on Thurs., June 21, open interest was at 47,713 contracts, which was another new record.
Traders said that in the past few months there has been increased participation by funds and commercial market participants in the wheat wheat options contract. The Kansas City wheat options market has been experiencing increased depth in the market, increased liquidity and tighter markets. As a result, more people are utilizing Kansas City wheat futures options for hard red winter wheat.
In turn, the surge in options open interest translates into more hedges in wheat futures. Traders noted that producers, commercials and commodity funds have been increasingly using the wheat futures market as a hedging tool in the last couple of months. Therefore, there has been an increase in hedging on both the buy and sell sides. Overall, increased tension in the marketplace is translating into increased volume in futures and options.
"The last couple of months have been ground-breaking for the KCBT wheat futures and wheat options contracts, " said KCBT Chairman Craig N. Deeds. "The industry continues to realize that the KCBT's wheat contracts are an excellent price discovery mechanism."
Open interest measures the number of open trading positions in a market. Each KCBT wheat futures contract represents 5,000 bushels of wheat.
