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KCBT Wheat Options Set New Single-Day Volume Record

Date 17/06/2002

Trading in the Kansas City Board of Trade wheat options contract set a new single-day record of 6,750 contracts on Friday, June 14, breaking the previous single day record of 5,410 contracts, which was set on May 29, 2002.

Traders said that a combination of factors led to the large-volume trading day. The July wheat options contract will be expiring this Saturday, June 22. In front of expiration, some people with options contracts are either liquidating their positions or rolling their position into the September contract.

Also, throughout the year, traders have noted an increasing number of people have been looking at diversified strategies for risk management and utilizing wheat options as part of their risk management plan. In the past year, the KCBT wheat options pit has seen increased depth in the market, increased liquidity and tighter markets. These factors have led to a more efficient marketplace, particularly when added to a larger number of both local traders and brokers in the wheat options pit.

"The KCBT wheat options contract has shown unprecedented volume gains in 2002, setting new monthly records each month since December 2001 as the industry has been recognizing it as an important hedging tool, " said KCBT President Bob Petersen. "We are looking forward to setting another annual record in the wheat options contract in 2002 if trading continues at its current pace."

Options trading has seen a large increase in volume in 2002, continuing the trend seen in the last several years. Year-to-date volume through June 14 amounts to 176,754 contracts, which is 18.2 percent ahead when compared to 2001 volume through the end of June.

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. KCBT wheat options have been trading since 1984.