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The Agricultural Futures Exchange of Thailand (Afet) is benefiting from the ongoing record price gains on farm commodities around the world.

It is a golden time for Thai farmers as well as Afet, as seen from the unprecedented uptrend in prices of oil, gold, wheat, rice, tapioca and rubber among other commodities since May 2004.

Dr Chaipat Sahasakul, secretary-general of the Office of Agricultural Futures Trading Commission, said the global "crisis" appears to have created several opportunities for Thailand.

First, the skyrocketing oil prices, which topped US$120 a barrel this week, mean that biofuels  have a bright future as an alternative to fossil fuel.

Second, global warming has negatively affected agriculture and fisheries worldwide, with farm output likely to fall due to a decreased acreage and climate change.

Thailand has a good chance to be a major supplier of biofuels because it is a big producer of tapioca, sugar cane and palm oil, used as raw materials to produce ethanol and biodiesel.

As for food and manufacturing industries, Thailand is also a major producer of rice, shrimp and rubber.

In this context, the country has an opportunity to exert greater influence on the world market for these commodities through Afet, which was set up four years ago.

In terms of global potential, Thai rubber, rice, tapioca, shrimp and sugar are ranked highly on the world market.

Altogether, these five commodities generated a total of Bt448 billion in export earnings in 2007.

At present, rubber, 5-per-cent white rice and tapioca are traded on Afet, which Chaipat said will help modernise the links between local Thai produce and the global market.

Futures markets such as Afet aim to help the market get reliable demand-supply and pricing data, while serving as a hedging tool for farmers, traders, manufacturers and exporters.

Hedging is especially important amid volatile price movements as seen in the past few years. A good example is rice whose prices have more than doubled in the past five months, resulting in higher risk.

For rice millers, Afet's futures contracts, for example, could be used to avoid potential losses in price movement when they buy paddy from farmers and then enter into supply contracts with exporters.

For investors and speculators, Afet is just like another stock or stock futures market so its contracts may account for 5 per cent to 10 per cent of a given portfolio.

A comparison shows that rubber futures contracts generated more profits than investing in stocks or bank deposits between May 2004 and Apr 2008.

Meanwhile, the prices of rice futures contracts now move faster than those of gold and crude, creating more opportunities for investors and speculators.

Afet can help reduce risks in a highly volatile market.