CME Group Inc. said on Thursday it would launch a new set of rainfall futures and options contracts for traders looking to hedge risk in the agricultural commodities markets.
The new contracts, which will be based on the amount of rainfall in cities such as Chicago, Des Moines, Iowa, New York and the Dallas-Fort Worth area, will start trading on Nov. 1, CME Group said in a statement.
“A significant number of industries, from agribusiness to recreation, are reliant on good weather, but also are at the mercy of bad weather,” Tim Andriesen, CME Group’s Managing Director of Agricultural Commodities and Alternative Investments, said in a statement “Rainfall contracts, in conjunction with our existing suite of weather products, will allow these businesses to manage the resulting risk.”
The contracts will be based on the rainfall in nine U.S. cities.
CME currently offers contracts based on weather conditions related to temperature, snowfall, frost and hurricanes as well as rainfall in other cities around the world.
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