Corn futures contracts are the asset of choice for expert traders because to the leverage and intrinsic form of commitment of purchasing or selling a certain commodity at a specified price. The Teucrium Corn Fund is the most appropriate asset to explore for retail traders who don’t have a futures trading account, are interested in leveraged speculation, or are willing to take delivery of physical corn (CORN). This exchange-traded fund (ETF) provides retail investors with a cost-effective option to obtain exposure to corn futures without taking on the risk of holding leveraged contracts.
How do you go about purchasing corn futures?
What is the best way to trade corn futures? Corn futures are traded electronically on the Globex platform at 5,000 bushels per contract from 8:00 p.m. U.S. ET to 2:20 p.m. U.S. ET the next day. To trade corn futures, you’ll need a futures account that has been approved.
Is it possible to trade corn futures online?
Corn is ingrained in all of our lives, whether we realize it or not. The demand for ethanol has risen considerably as a result of recent oil price speculation. Demand for rice as a staple of the global diet and source of energy can only rise. There are two different contract denominations that can be traded:
Contract Expiration: To receive access to our web-based trading platform, request a free demo.
You will be able to read entire contract parameters, including First Notice and Last Trading Day, from within the web-based platform.
Margin requirements for open futures holdings are subject to vary and are required.
The CME Globex trading platform offers access to the corn futures market.
Open outcry trading takes place from 7:30 a.m. to 11:15 a.m. PT.
Electronic trading is available during open outcry trading and from 4:00 p.m. to 4:00 a.m. p.m. p.m. p.m. p.m. p.m. p.
Trading example: If you buy one contract of ZC at 600 and it goes to 610 the next day, you will make a profit of $500.
On the other hand, if it dropped to 590, you would lose $500. You can trade the small contract, which is 1/5 the size, for less risk and volatility.
How do I go about purchasing goods?
Those interested in entering the commodity market might do so in a variety of ways. Investors interested in commodities can invest directly in the physical commodity or indirectly through commodity firms, mutual funds, and exchange traded funds (ETFs).
What is the best way to interpret corn futures prices?
The most recent or most recent trade price. In this situation, 614.6 = $6.146 per bushel futures price in US Dollars
Total open option contracts that have been traded but not liquidated with offsetting trades are referred to as open interest.
The component of the cash price that is influenced by local supply and demand is known as the basis. Each grain terminal has its own set of basis levels, which might be negative or positive. When reading the basis section of grain prices, it’s crucial to know if the price is in Canadian dollars, the delivery time, and the unit of measurement (bushels or metric tonnes).
In comparison to the futures market, a high basis suggested a high local cash price. It’s a sign of high demand or low supply in the area.
Weakening base indicates that local supply is relatively large in comparison to overall supply.
Premiums and reductions will be tailored to both the buyer and the grain you deliver. Premiums and discounts are frequent in the grain industry, depending on market conditions, grain grade, and what a grain company is seeking for. When negotiating a contract, inquire about the premium and discount levels. Having grain samples assessed in several locations is a useful approach to figure out what quality the grain is and can aid in making quality-based marketing decisions.
Other things to have top of mind when reading grain prices
It’s crucial to understand the currency in which the price is quoted and how the grain firm manages foreign exchange. Grain companies can adjust for foreign exchange in the futures market or on a basis basis.
What is the purpose of futures contracts?
A futures contract is a legally enforceable agreement to acquire or sell a standardized asset at a defined price at a future date. Futures contracts are exchanged electronically on exchanges like the CME Group, which is the world’s largest futures exchange.
What’s the deal with corn futures being so high?
Prices have been supported by tightening supply, rising ethanol demand, and good exports, which appears poised to continue into the new year.
Corn prices in the United States reached multi-year highs in April and May. On the Chicago Board of Trade, the March 2022 corn futures contract achieved a high of $6.405/bushel before falling down to little over $6/bu by the end of the year.
Despite the fact that the world’s top grower’s corn harvest has concluded, prices have held high due to sustained demand from the ethanol business and additional support from rising fertilizer prices. Corn is the principal feedstock for ethanol production in the United States, with the ethanol industry consuming about 40% of the country’s corn production.
Following a spike in the price of major feedstocks and export limitations imposed by providing countries, fertilizer prices have seen an extraordinary increase in recent months. All major fertilizer prices have risen dramatically in the recent year, with some more than doubling. Corn is a fertilizer-intensive crop, therefore a spike in fertilizer prices directly affects US farmers’ input costs and complicates planting decisions.
Fertilizer prices impact supply
Due to fertilizer price and availability constraints, a 3 million acre shift from corn to soybeans is feasible in the United States, with both corn and soybean acreage around 90 million acres in the marketing year 2022-23 (September-August). Because soybean requires less fertilizer, it is likely to grow more popular.
Rabobank is of the same mind. According to Rabobank’s Agri Commodity Market Research Outlook 2022, “corn acreage will shrink to 91.8 million acres in 2022-23 as input-squeezed margins, unfavorable crop rotations, and competition balance CBOT corn’s strong price and historically advantageous ratio to soybean.”
In a recent update, Platts Analytics stated that price is only one piece of the equation, and that availability will also play a role.
“While Platts Analytics set corn and soybean acreage for 2022-23 at 90 million acres, the price of natural gas will be a factor moving forward,” it said, adding that “it is our opinion that a recent drop in the price of nitrogen can move the needle slightly in favor of corn but not to the extent some are suggesting.”
Corn prices will need to remain high in order to be viable due to the higher input costs.
In an October update, IHS Markit stated, “The goal of the agricultural markets from here will be to keep prices high enough to the farmer for nitrogen demanding commodities like corn to preserve economics that are advantageous to maize production relative to other crops.”
Aside from fertilizers, increased demand from the ethanol industry is likely to support US maize prices.
Ethanol demand recovery boost DDGS supplies
For the past few months, ethanol output and cash margins in the United States have been hovering near all-time highs, resulting in higher DDGS supplies.
“Plants are bursting at the seams,” a source stated. On Nov. 24, full crush margins hit a high of 175.314 cents per gallon. According to the Platts Analytics ethanol cash margin model (prompt Argo ethanol + prompt Chicago DDGS), margins have fallen to just over 100 cents/gal as of mid-December, but are still 50 cents/gal higher than the same time in 2020.
“Ethanol production in the United States increased from 2020 to 2021 and will rise again in 2022,” according to Platts Biofuels Analytics Global Manager Corey Lavinsky. More supply will definitely enter the DDGS market as a result of this.
The US Grains Council noted that “ethanol run rates continue strong, bringing additional product into the market, but firm domestic demand is keeping values supported.”
Ethanol demand, which has bolstered US corn prices during the harvest, is expected to continue in 2022.
“The continued ethanol demand revival in the United States will increase export competition and boost US corn demand to a new high of 14.98 billion bushels in 2021-22. Production will barely outstrip demand, resulting in ending inventories of around 1.35 billion bushels “According to Rabobank.
Meanwhile, despite some slowing from the pace in 2020, maize export demand is expected to underpin prices through 2022. Total maize exports in the United States increased by 54% from 2019 to 2020, and USDA predictions for the 2021-2022 crop year only predict a 9% reduction.
Are you able to speculate on corn prices?
The use of a contract for difference (CFD) derivative instrument is one technique to trade corn. Traders can bet on the price of maize using CFDs instead of holding the underlying asset. The difference between the price of corn at the time of purchase and the current price is the value of a CFD.
CFDs on maize are available from a number of regulated brokers throughout the world. Customers make a deposit with the broker to serve as margin. CFDs offer traders the ability to gain exposure to corn prices without having to buy shares, ETFs, futures, or options.
What is the purpose of corn trading?
Maize is of particular interest to many traders at the present, as factors such as increased export demand, improved corporate results, and tighter-than-expected stocks have pushed corn prices higher in recent weeks. We’ll take a deeper look at a few charts that active traders frequently utilize to profit from an increase in maize prices in the paragraphs below.