Hedge Funds Fuel Weather Contract Growth

FromThe Economist:

The most common users are energy companies (or hedge funds trading energy risk), which account for 46% of the market. Many of them are hedging natural-gas prices that are very sensitive to warm or cold weather. Agriculture accounts for 12% of the derivatives market. This share could be bigger, but free government crop insurance in many countries has dampened demand. Aid agencies have also used weather derivatives to help poor countries cope with drought.