January 10, 2011

 

Wheat leads rise in European crop futures exchange

 

 

Rising interest in wheat futures prompted more than twice the sum in Paris dealing volumes last year, which looks to be strengthened in 2011 by the contract's inclusion in a major commodities index.

 

Average daily trading volumes in most of NYSE Liffe's farm commodity contracts, which are traded in London and Paris, jumped last year, with an average increase of 33%.

 

However, the jump in Paris milling wheat was especially strong, at 125%, driving average daily volumes to nearly 16,700, and seeing the lot overtake London-traded robust coffee as NYSE Liffe's most -traded contract.

 

Average dealing volumes for London-traded feed wheat rose by 28% to 572 lots a day.

 

NYSE Liffe attributed the increase both to the exchange's own success in winning trade against the Chicago giants, with market share versus CME Group increasing to 20% from 4% over the last three years, as well as the growing interest from trade buyers seeking protection from price volatility, and from investors seeking exposure to commodities.

 

"People have been looking at commodities as an investment because of the poor returns available on many other assets classes," a spokesman told Agrimoney.com.

 

And the growing importance of Paris milling wheat on the world stage may have set up a virtuous circle of increasing interest, with the contract to be included from this month in the Rogers International Commodity Index (RICI), with a weighting of 1%.

 

This should make the contract's growing popularity "self-fulfilling, in bringing other interest into the contract", the spokesman said.

 

It will oblige index funds following the RICI, designed by commodity investment guru Jim Rogers, to buy into Paris wheat.

 

The inclusion of Paris wheat in the index has come at the expense of Chicago wheat, whose weighting has been cut by 1.25 percentage points to 4.75%.

 

It follows RICI's inclusion of Paris-traded rapeseed, with a weighting of 0.25%, a year ago.

 

Paris rapeseed volumes rose 47% last year to an average of 4,660 lots a day.