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Wheat futures volumes growing in 2013

Agricultural futures trading volumes struggled throughout 2012, but data from March 2013 suggests a recovery is occurring, though slowly.

Following a year of uncertainty related to confidence-rattling scandals, the volume of agricultural futures and options contracts traded in the U.S. market appeared to be recovering during the first three months of 2012. Though volumes were not up across the board, trade in winter wheat futures contracts grew significantly from prior year levels.

On a percentage basis, the largest increase in March volume was for trade of Kansas City Board of Trade (KCBT) hard red winter (HRW) wheat futures and options. With an average daily volume (ADV) of 24,579 contracts, trade in KCBT contracts grew 24% compared with March 2012.

The growth in HRW trade was not entirely unexpected, as analysts had largely assumed integration of the KCBT into CME Group’s operations would spark additional interest in the product line. CME completed its acquisition of the KCBT last December, and in February announced that integration into CME’s clearing system would commence April 15, with physical integration of pit trading into the Chicago trading floor set for June 28 (Feedstuffs, Feb. 11).

Hard red spring wheat (HRS) contracts also saw increased trading interest in March, with total volume up 14% from a year ago on the Minneapolis Grain Exchange (MGEX). March was the sixth consecutive month of year over year volume growth for the Exchange, with total volume recorded at 92,576 contracts traded, of which 99.75% were HRS products.

Outside hard red wheat issues, agricultural commodities trade was down from March 2012 – CME said its agricultural commodities volume last month averaged 969,000 contracts per day, off 13% from the prior year. Total exchange ADV was relatively flat, year-over-year, at 12.5 million contracts.

Agriculture contracts comprised 7.8% of CME’s average daily volume in March; for the quarter, ADV was off 3% from the first quarter of 2012 at 1.08 million contracts traded. The exchange reported record volume in live cattle contracts for the quarter.

In addition, CME saw record quarterly volume in several currency and treasury issues, as well as record open interest for its suite of foreign exchange products. Henry Hub natural gas futures set nine consecutive open interest records during the month of March.

While CME’s agriculture contracts overall saw lighter trade in march, on a rolling three-month average, volume has increased for four consecutive months: from 962,000 contracts per day for the period ending December 2012 to 1.08 million for the quarter ending March 2013.

CME noted that of the 249 million contracts traded across its product lines in March, 88% was traded electronically.
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