CME Group Inc. today said third-quarter profit jumped 21 percent as the Chicago-based futures exchange operator benefited from grain and livestock bull markets that fueled a surge in agricultural trading.

An average of 944,000 agricultural contracts traded each day during the third quarter, up 33 percent from the same period in 2009 and the biggest increase among CME’s six market categories, the company said in a statement. CME also trades futures and options based on interest rates, currencies and energy.

Corn futures in September rallied to two-year highs above $5 a bushel on deteriorating prospects for this year’s U.S. harvest. Hog and cattle futures reached multi-year highs earlier this year amid shrinking herds and stronger exports.

The run-up in grain and livestock prices attracted speculators and other types of traders seeking stronger returns as traditional investments, such as stocks and bonds, languished much of this year, analysts said.

“There’s more interest in trading a bull market,” said Dan Cekander, director of grain research for Newedge Group in Chicago. “We’re seeing people who’ve never traded grain, metals guys, financial guys. They’re putting allocations in a hot commodity area.”

Grain prices probably will remain strong at least through the end of the year, partly because the U.S. corn crop may be lower than previously estimated, Cekander said. Additionally, with Russia’s wheat crop slashed by drought and China buying more corn and soybeans, global stockpiles are expected to be tight over the next couple years.

Speculators “are massively long” in corn futures, Cekander said, and “the expectation widely held is that the corn yield is going to come down.”

In an Oct. 8 report, the USDA estimated the nation’s corn harvest at 12.66 billion bushels, down 3.8 percent from a forecast a month earlier. The USDA trimmed its average corn yield estimate to 155.8 bushels an acre, down 4.1 percent from 2009.

Average corn yields may decline another bushel from the USDA’s current estimate, Cekander said. The USDA is scheduled to release its next crop production update Nov. 9.

For the year through September, an average of 258,679 corn futures contracts, or almost 1.3 billion bushels, traded each day, up 28 percent from the same period in 2009, according to CME. Cattle and lean hog futures trading was up 31 percent and 20 percent, respectively.
In late trading today, corn futures rose 3 cents to $5.80 ¼ a bushel, up 64 percent since the end of June.

Overall, trading at CME surged this year as global financial turmoil increased demand for hedging instruments, such as futures contracts based on Eurodollars and the Standard & Poor’s 500 stock index. CME generates most of its revenue through transaction fees that average about 81 cents per contract.

Net income during the quarter ended September 30 rose to $244.3 million from $202.3 million in the same period a year earlier, CME said in today’s statement. Revenue increased 13 percent, to $733.4 million.

During the third quarter, CME’s total trading averaged 11.6 million contracts a day, up 15 percent from a year earlier. Interest rate- or equity-based contracts accounted for more than two-thirds of CME’s trading.