If you are interested in trading Rice futures it is helpful to become familiar
with the history of the Rice market. The CBOT Rough Rice Contract is the global benchmark for the pricing of rough rice. The
size of the rough rice contract translates into a relatively small underlying value per contract, making it attractive for
hedgers and speculators alike, providing easy market access for global participants small and large.
Rice originated in Asia. Asian farmers account for over 90% of the world's total
rice production. The largest producers are: India, China, Japan, Indonesia, Thailand, Burma, and Bangladesh.
The United States has been producing rice for more than 300 years. In the Unitied
States direct consumption of cooked rice accounts for more than half of the consumption of rice. The use of rice in beer
production accounts for about 12% of its use. Since the 1980s the use of in processed foods has been growing rapidly. Rice
also widely used for pet food.
Together the Unites States and Thailand produce
6% of the world’s rice, but account for over 45% of the total exports. India and Vietnam are two of the other major
exporters. In early 2008 these countries announced export controls that sent rice prices sharply higher.
A large set of commercial market participants, including farmers, exporters and a diverse set
of institutional participants underscores the importance of rough rice futures and options markets ensuring highly efficient
pricing and continuous liquidity.
