Crypto Derivatives Exchange FTX Starts Offering Lumber Futures Amidst Commodities Price Boom
FTX, one of the largest derivatives exchanges, has started to offer lumber-based futures markets for its customers, given the recent interest in speculating on commodities prices. Lumber has been one of the key commodities that have skyrocketed in price during these last months, affecting and halting many building projects all across the U.S.
FTX Starts Offering Lumber Futures Markets
FTX, one of the main cryptocurrency derivatives exchanges, has announced it would start offering lumber futures in its product lineup, amidst a resurgence in the interest of traders on this commodity.
Sam Bankman Fried, CEO of the exchange, stated the FTX futures team reacted to the requirements of its users in just 12 hours, programming the logic behind it in just two hours. The contract gives customers exposure to the price of softwood lumber for July 2021, expiring on August 12th. This represents a stark contrast with the time that other institutions like CME spend to launch equivalent products.
FTX has been always quick to react to the interests of its users, launching highly demanded derivatives contracts. Last year, FTX also launched oil futures when interest in the product reached peak levels after its price plummeted to zero when the demand for oil touched minimums due to the coronavirus-derived restrictions, and also offered U.S. presidential election-based futures.
Lumber and Other Commodities Skyrocket
This interest of traders in lumber is derived from the amazing price development of the commodity in the last months. According to an article from Fortune, the price per thousand board feet of lumber got an all-time high of $1,359 this week, and analysts agree that it could rise even more.
The reasons are related to the effects of the coronavirus pandemic on the production of lumber and the rising demand for the product due to the housing boom now in place.
While sawmills stopped production and distribution attending coronavirus safety protocols, the demand soared thanks to stay-at-home politics that enticed Americans to start hobby projects, decreasing the available inventory. Now, builders are upset and many construction projects have been halted to wait for a decrease in lumber prices, but the demand is unlikely to decrease in the short term, and due to the nature of the commodity, production won’t increase anytime soon.
This price overheating is also affecting other commodities, as production fails to cope with the immense demand for products from countries that have already left coronavirus behind. This is the case of iron ore, the material used to produce steel, corn, copper, soybeans, and other important agricultural products, that have touched all-time high prices during the last month.
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