Intro to Commodity Derivatives

Blooming rapeseed (Brassica napus).

Image via Wikipedia

Commodity derivatives, much like the recent temperature in London, have been on the rise, with volumes booming.

For those of you who aren’t so familiar with us, the commodities team is responsible for the soft and agricultural commodity products here at NYSE Liffe. Our portfolio includes futures and options contracts on products such as: Cocoa, Robusta Coffee, White Sugar, Milling and Feed Wheat, Rapeseed, Corn, Malting Barley and Skimmed Milk Powder. The broad stable of products we cover provides us with a unique perspective on the global commodities market.

Over the past few years we’ve seen particularly strong growth in trading volumes and liquidity in our agricultural contracts, with a total increase in volume of 87 percent year-to-date in 2011 compared to 2010. Milling wheat and rapeseed have been the best performers by far, with growth in volumes of 93 percent and 74 percent, respectively. These contracts are primarily used for hedging purposes by producers, exporters, trade-houses, feed and starch processors and refiners. We’re also seeing a trend of new market participants entering this space, such as investors and proprietary trading groups.

Our sales and marketing strategy for the rest of the year is to maintain the strong momentum by continuing to support our traditional customer base in their trading activities, and to generate new interest from prospective clients, along with keeping an eye on the non-traditional territories.

Of these territories, I’m currently leading a charge into Ukraine, Russia and the CIS (the former Soviet Union region), with the aim of promoting our commodity portfolio in this region.

Future posts on this blog will aim to keep you updated on what we are doing and which new products and initiatives are being implemented (along with some anecdotes from our “on the ground” research in various markets).

In the meantime, please feel free to drop me a line with any questions!

Enhanced by Zemanta