Water joined a list of commodities traded on Wall Street after two trades of its January 2021 contract went live on Monday, according to Bloomberg. CME Group Inc.’s January 2021 contract, linked to California’s $1.1 billion spot water market, traded Monday at 496 index points or $496 per acre-foot.

  • The futures will help water users manage risks and better align supply and demand.
  • Farmers, hedge funds, and municipalities can now hedge against or bet on future water availability in California, the world’s fifth-largest economy and U.S.’s biggest agricultural market.
  • The water contracts were announced in September after heat and wildfires ravaged the U.S. West Coast and as California was emerging from an eight-year drought.
  • Analysts suggest that climate change, droughts, population growth, and pollution could raise water scarcity issues, and pricing could become a hot topic in the future.
  • CME did not identify potential market participants but noted the exchange had attracted interest from agricultural producers, public water agencies, utilities, and institutional investors

Commodity futures are currently declining.  S&P DFI is down 0.17%