Stocks & Commodities V. 24:8 (55): Futures For You by Dan O誰eil
INSIDE THE FUTURES WORLD
Want to learn how the futures markets really work? Dan O誰eil, a principal at online futures and forex broker XPRESSTRADE (www.xpresstrade.com), responds to
your questions about today痴 futures markets. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be
posted there, and selected questions will appear in a future issue of S&C.
Q: We致e been hearing more about the upcoming hurricane season because of last year痴 record damage. Obviously, severe weather can wreak havoc in
some commodity markets. What are a few futures markets to look at in terms of potential storm-related shocks?
A: While nobody likes to think about profiting from a natural disaster that upends so many lives, the fact is that many commodity markets have long been subject to the ebbs and flows of weather. In fact, weather is one of the challenges that many commodity producers
face, and futures and options contracts were designed largely to help producers manage and mitigate such
risks. In many of these markets, weather-related action just naturally opens up opportunities for speculators as well.
As another hurricane season bears down on the southern coastal US, activity in orange juice, one of the true weather markets, figures to give traders a daily dose of volatility. Frozen concentrated orange juice (FCOJ) futures have always been subject to a variety of
supply-side pressures, but a recent price climb to levels not seen in 15 years, combined with the severity of the past few hurricane seasons, make the outlook
for the remainder of 2006 particularly intriguing for speculators.