August was a tumultuous months for markets across the board. The first ever downgrade of U.S. debts was handed out by S&P while the Fed announced it would be freezing rates for nearly two years. Markets reacted poorly to the headlines through out the month, swaying back forth by as much as 5%. Volume went through the roof as traders made a play to profit on volatile markets, while others pulled their assets and headed for higher ground and safer asset classes [see also Dividend Special: Top Companies In Every Major Commodity Sector].
With the month of August subject to massive volatility and surging trading volumes, the CME Group certainly had its hands full. The CME group is a powerful corporation that owns a number of derivatives and futures platforms, including the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), New York Mercantile Exchange (NYMEX and COMEX), and Dow Jones Indexes. In the month of August alone, the CME Group saw a total volume of 333 million on futures contracts and 60 million on options across all of their platforms. Among the heavy futures trading, were several that stood out from the rest. Below, we outline five of the heaviest-traded futures contracts from the CME Group this past month:
Crude Oil Phy – 17,178,452
While equities bounced back and forth, crude oil was taken for a nasty ride, with its price briefly dipping below $80 per barrel. While oil has now recovered, sitting near the $89 per barrel mark, last month saw an unusually high volume topping 17 million, representing a 48% increase from July’s volume. All in all, energy contracts had a total volume of roughly 35.5 billion, meaning that crude oil contracts accounted for nearly half of all energy trading. Investors looking to gain access to crude oil futures can not only use the CME Group, but also some exchange traded products like United States Oil Fund (USO) and United States Brent Oil Fund (BNO) for exposure to crude futures contracts [see also Major Countries Burn Up Crude Reserves: Big Oil In Trouble?]
Natural Gas Phy – 6,904,891
Natural gas is one of the most popular trading tools around, as a number of investors look to profit from its high volatility as well as high volume. August’s volume for natural gas futures tallied a near 30% increase from July, as investors scrambled to either cash in on volatility, or exit markets until things cooled off. Investors looking to gain exposure to this asset class can use the United States Natural Gas Fund LP (UNG), or the Select Natural Gas Portfolio (FSNGX) to add this commodity to your portfolio. Although keep in mind that a minimum investment of $2,500 is required for FSNGX [see also Top Seven Strangest Commodity Futures].
Corn – 6,834,948
The first non-energy product to top the list may come as a bit of surprise to some investors, as corn topped even gold and silver to take the number three spot. Closing in on seven million contracts traded, corn volume grew by 33.5% from July, but actually dropped by about 1% from August of 2010. Corn contracts fall under the “Commodities and Alternative Investments” category at the CME, which saw total volume of 18.1 million, with corn being involved in over 1/3 of all contracts in this segment. Investors looking for corn exposure can check out a number of various agricultural products, but the Teucrium Corn Fund (CORN) is one of the few securities in the world to offer pure exposure to this commodity [see also Ultimate Guide To Corn Investing].
COMEX Gold – 6,406,615
Gold has been gobbling up headlines lately, as its price has surged in recent months to briefly burst through the $1,900 per ounce mark. With such a rapid appreciation in price, many are worried as to whether the metal is overvalued, or if its historic run has only just begun. No matter what gold’s future has in store, it is abundantly clear that the metal is very popular, as August 2011′s volume grew by an astounding 193% from the same month in 2010 and by nearly 50% from July. Investors wanting long-term exposure to gold should give SPDR Gold Trust (GLD) a look, as it offers exposure to physical bullion, but can also be used as an effective trading instrument thanks to its average daily volume of over 20 million shares [see also Three Reasons Why Gold Is Overvalued].
Soybeans – 3,332,714
Soybeans are another popular agricultural product that saw a healthy volume last month. What is more interesting is that there are also futures for soybean meal and soybean oil, and the three combined had a total volume of nearly six million. Looking at just soybeans themselves, the contracts saw a 23% jump from July’s volumes and a 47% increase year over year. Soybean exposure is hard to come by as far as investing is concerned though the DB Agriculture Fund (DBA) from PowerShares is a good place to start [see also Ultimate Guide to Soybean Investing].
Other heavily traded contracts on the month include RBOB Phy (2,874,468), Heating Oil (2,843,710), COMEX Silver (1,982,811), and COMEX Copper (1,312,515).
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Disclosure: No positions at time of writing.