'New weather patterns' boost demand for soft commodities - ICE
7th July, 2023 | Luke Jeffs
The Atlanta-based group said trading volumes in its soft commodities segment, which includes sugar, coffee, cocoa and cotton hedging products, was up 22% in the first six months of this year
New weather patterns and their impact on commodities are partly behind increasing demand for Intercontinental Exchange’s soft commodities hedging products, the US exchange has said.
The Atlanta-based group said trading volumes in its soft commodities segment, which includes sugar, coffee, cocoa and cotton hedging products, was up 22% in the first six months of this year compared to the same period last year.
At the same time, soft commodities derivatives open interest was up almost a fifth (19%) to 4.2 million lots.
Sugar derivatives have been in-demand, with trading volumes up 30% in the first half of this year compared to the same period in 2022 as sugar open interest rose 22% to 1.7 million lots. Coffee volumes were up a tenth in the first half, cocoa trading was up 17% and cotton trading activity was also up 10% year-on-year. ICE said cocoa futures and options volumes hit a one-day record of 1.4 million contracts on June 29.
David Farrell, chief operating officer at ICE Futures US, said in a statement: “As new weather patterns emerge and fundamentals change, participants utilise ICE’s deeply liquid markets to manage price exposure for these commodities which are so central to daily life.”
The data emerged a day after the US exchange group, which operates markets in the US, Europe, the Middle East and Singapore, said its average daily trading volume was up 5% in June, thanks largely to ICE’s energy segment.
ICE said on Thursday its energy average daily volume (ADV) was up 26% in June, which partly reflects slower demand in the middle of last year as markets reacted to the effects of the Russian invasion of Ukraine.
ICE’s oil ADV was up 34% last month, driven by a 29% spike in demand for the exchange’s flagship Brent crude oil contract.
