Liquidity Issues

The rising price of agricultural products has led dealers to offer a range of structures with agricultural underlyings. But what are the risk management implications for investors and dealers in what is still a relatively illiquid market? By Rachel Alembakis

Agricultural commodity prices have soared, with the supply of many soft commodities struggling to keep up with growth in demand, particularly from Asia. This dynamic has resulted in headlines of rice shortages across the region and concerns about high foodstuff prices potentially causing civil unrest in some developing economies.

Wheat futures on the Chicago Board of Trade (Cbot), for example, rose