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(Bloomberg) -- CME Group wants to give retail investors an opportunity to trade corn and soybeans — without the risk of taking delivery of thousands of bushels if they hang on to a contract for too long.
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Building off last year’s record futures and options volume in agriculture, the exchange is launching five new “micro” contracts for farm commodities that will trade at one-tenth the size of its standard offerings. The contracts, which started trading Monday, are also cash-settled instead of the physical-delivery system for the legacy products.
The new offerings are part of a push for retail traders, after CME earlier this year rolled out other futures products on Robinhood Markets Inc.’s app, seeking to expand beyond institutional investors.
The micro contracts may also be well-suited for smaller corn farmers dealing with a late harvest, or cattle and dairy operations looking to hedge feed costs.
“This gives them the ability to do bushel-sized bites,” said John Ricci, managing director of global agriculture who joined CME last year after leading ETF trading at Invesco.
CME’s agriculture trading volumes are up 35% so far this year, making agriculture its fastest-growing asset class. Still, while retail investors are piling into the exchange’s oil, metal and equities products, such traders are wary about farm commodities.
A steady drumbeat of tariff threats from President Donald Trump is keeping traders on edge. Increased production of renewable diesel also has energy companies wanting more exposure to products such as soybean oil, with a micro contract accounting for 6,000 pounds of the vegetable oil instead of the standard 60,000 pounds.
“We’re seeing lots of geopolitical uncertainty that’s created a lot of risk for our customers, and so that was an opportunity for us to serve them,” said Derek Sammann, global head of commodities and options products at CME.
More than 54,000 contracts of the new micros had traded by Monday morning in Chicago, with activity in each of the new products led by 20,000 micro soybean and 17,000 micro corn, according to CME.
In addition to the new micro contracts, the exchange is also introducing agricultural options that expire every day of the trading week, instead of just on Fridays. These products will help trade around certain events, such as weekly crop condition reports that typically come out Mondays during the growing season.