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Breaking!
Now 'WATER' is a traded commodity!
Transparent Gold?
-Where does it trade?
Chicago Mercantile Exchange
-CME on Monday began dealing in water futures tied to Nasdaq Veles California Water Index.
-Index will measure the Vol. weighted avg price of water!
@kirtan0810
Now 'WATER' is a traded commodity!
Transparent Gold?
-Where does it trade?
Chicago Mercantile Exchange
-CME on Monday began dealing in water futures tied to Nasdaq Veles California Water Index.
-Index will measure the Vol. weighted avg price of water!
@kirtan0810
The futures are financially settled, as opposed to requiring the actual physical delivery. Contracts include quarterly ones through 2022, with each representing 10 acre-feet of water, equal to roughly 3.26 million gallons.
Farmers, hedge funds, and municipalities alike are now able to hedge against -- or bet on -- future water availability in California, the biggest U.S. agriculture market and the world’s fifth-largest economy.
CME Group Inc.’s January 2021 contract, linked to California’s $1.1 billion spot water market, last traded Monday at 496 index points, equal to $496 per acre-foot.
-California has been trading water for a long time now; only it did not allow futures trading.
-Before now, water rights were traded only in the spot market. This allowed the holders to pump water from the ground or reservoir based on the price quoted in the spot market.
-Before now, water rights were traded only in the spot market. This allowed the holders to pump water from the ground or reservoir based on the price quoted in the spot market.
What is the need to trade water
California is a state with the most chaotic water market in entire America, because :
-It is the largest consumer state, accounting for 9 % of d nation's daily consumption
-It suffers from frequent droughts
-It suffers from frequent wildfires
California is a state with the most chaotic water market in entire America, because :
-It is the largest consumer state, accounting for 9 % of d nation's daily consumption
-It suffers from frequent droughts
-It suffers from frequent wildfires
This continuous disturbance in the supply and demand of water leads to frequent rise and fall in the prices.
This cycle eventually makes it expensive for the municipalities and farmers in the state to purchase water — who have no other option but to pay.
This cycle eventually makes it expensive for the municipalities and farmers in the state to purchase water — who have no other option but to pay.
The solution to the issue: sell water futures.
Nasdaq and Veles Water have partnered with WestWater Research, LLC, to launch the Nasdaq Veles California Water Index (NQH2O Index)
Nasdaq and Veles Water have partnered with WestWater Research, LLC, to launch the Nasdaq Veles California Water Index (NQH2O Index)
WestWater Research, LLC is the leading financial and economic consulting firm in water trading. Veles is a financial products company specializing in water pricing, water financial products, and economic and financial methodologies.
The index would track the price of water across the five largest regions in California. WestWater's Waterlitix database would serve as the source for underlying transaction data on the index.
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