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A range of issues affecting European and world grain and oilseed markets has resulted in a heightened interest in the use of futures and options both as an investment and as a price risk hedging mechanism. As a result of this, Euronext.liffe has seen a recent series of new volume and open interest records in its milling wheat and rapeseed futures and options contracts. Amongst others, market users have cited the following reasons for the record levels of activity in these Contracts:
- decreasing global grain stockpiles
- hot weather across Europe causing concerns in respect of upcoming harvest yields
- the advent of a European biofuel market bringing new participants into the grain and oilseed futures markets and changing the balance of supply and demand
- ongoing removal of CAP price support mechanisms and increasing price volatility attracting further use by traditional contract users
- movements in the prices of agricultural commodities attracting hedge funds and proprietary traders into the markets.
Ian Dudden, director of Commodity Products at Euronext.liffe said: "We are very pleased to see that, across the board, market participants are recognising that futures and options provide a viable mechanism to manage exposure to price volatility in a time when EU government price support mechanisms are being removed."
