Weather futures heat up

Weather futures traded at Chicago Mercantile Exchange (CME) are seeing record volumes as increasing numbers of end users become aware of the advantages of these contracts.

Weather Risk Management Association (WRMA)'s recent survey of the weather derivatives market examined activity from April 2002 to March 2003 and found that weather futures contracts listed on CME surged to 7,239. WRMA explained that "very few trades in weather risk management instruments occurred through CME during the previous survey period".

This marked increase is...