California's Commodity Creation: Water

Last week in California, water became a commodity crop. And like many resources with a supply- and demand-strained relationship, water found its way to a futures contract. Investors across the globe now have access to the CME exchange where they can buy and sell the right to purchase water at a particular price tied back to the state’s $1.1 billion water spot market. The Farmer Effect: Producers who get in on the bidding will have the chance to protect their water costs against price jumps and lock in some stability. For a state that uses4x more water than any other state in the country, producers won’t be passive in their attempts to protect their pocketbooks.