Source: CME Group
Renewed volatility in the lean hog market
Livestock industry participants have faced increased price volatility within the lean hog market. Not only has COVID-19 continued to impact supply chain dynamics, but African Swine Fever (ASF) has spread from China to Europe, with reports of the virus in Canada, the Dominican Republic, and Haiti. Adding to the mix, informed consumers are still hungry for quality US meat products, which is clearly illustrated by record export numbers to Mexico and several other markets beyond China. This has caused futures prices and implied volatility to roller coaster.
The CME Group CVOL Index, which tracks volatility and skew over time to help put context around current market conditions, illustrates Lean Hog volatility below.
You can use option spread strategies to mitigate risk during these uncertain times within the livestock industry. Read the case study, “Cost-effectively navigating livestock market volatility” to learn how.
Fuel from the field: soybean oil and its energy uses
Legislation from both the US and EU is driving increased demand for biodiesel and renewable diesel, with both alternative fuels being derived from soybean oil. Last year, biodiesel accounted for 35% of US soybean oil use. As biodiesel is considered carbon-neutral due to absorbing CO2 during the process of growing the feed stocks, demand is expected to continually increase, placing pressure on soybean growers and crushers.
This increased demand has driven soybean oil prices to more than double in the past 12 months with Soybean Oil future’s share of the soybean crush margin hitting the highest level in five years. Read more about soybean oil’s role within the renewable fuels market.
Source: USDA Oil Crops Yearbook
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.
Learn how disease spread is driving renewed volatility in the lean hog market, why biodiesel demand is fueling soybean oil usage, and the Ag product updates.
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