SPECIFICATIONS FOR CONTRACTS Each futures contract shall be for 5,000 bushels of No. 2 yellow corn at par, No. 1 yellow corn at 11/2 cents per bushel over contract price, or No. 2 yellow corn at par plus 1 1/2 cents per bushel over contract price.
A corn futures contract contains how much corn?
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.
What is a standard bushel in a corn or soybean futures contract?
Corn and soybean futures and options contracts are traded in 5,000 bushel increments, but “mini” corn and soybean futures and options contracts are also traded in 1,000 bushel increments. A standard-sized futures contract would cover 29 acres of corn output or 96 acres of soybeans at average reported crop yields, whereas mini-contracts would require one-fifth of that land. Small corn and soybean growers, who frequently run a variety of other businesses (such as cattle or poultry), rarely harvest significant acreages of corn and soybeans. Only 50 acres of soybeans and 42 acres of corn were harvested by half of the small corn and soybean enterprises. As a result, most corn/soybean growers can cover the majority of their operations with just one instrument. Furthermore, futures and options trading need some competence, and the returns from trading on modest volumes of produce may not be worth the time and effort required to obtain the necessary skills and experience for small farmers.
Farmers’ personal attributes also influence their decision to employ contracts, especially futures and options contracts. Even after controlling for differences in farm size, ERS researchers discovered that corn and soybean farmers over 60 were significantly less likely to use futures or options than younger farmers. Operators of maize and soybean farms with a college degree were slightly more likely to employ futures or options contracts, albeit in a minor way.
According to a 2016 survey, only 12% of corn and soybean growers used futures, options, or marketing contracts to control risk, indicating that most farmers do not use these tools to manage risk. Farms that use those tools are able to cover some, but not all, of their production with with one tool. Farmers that use futures contracts cover 41% of their maize production and 47% of their soybean production on average. When farms employ marketing contracts, they sell similar shares of corn and soybeans: 42% for corn and 53% for soybeans. Farmers cover a little more than 30% of their production when they use options contracts. Farms typically employ a variety of risk management strategies rather than relying solely on one.
The Asset on the CME
Corn futures are traded on the Chicago Board of Trade in the United States (CBOT). Corn is denoted by the symbol ZC, and one contract of corn is worth 5,000 bushels. Ticks with a minimum size of 1/4 cent per bushel are worth $12.50 per contract.
Corn futures, as previously stated, are a favorite investment choice for speculators and aggressive traders due to their proclivity for large price swings. Now consider how these price changes might be reflected in a trading position.
Corn Futures Contract Specs Calculation
Assume the front-month corn contract is now trading at $4.50/bushel and moves up five cents. In terms of a single normal corn futures contract, the value of the price shift is as follows:
- A one-cent change in a full-size corn futures contract (5,000 bushels) is equal to $50.
- 20% of the complete contract (or $10) for a micro-size corn futures contract (1,000 bushels).
0.05 cents per bushel multiplied by 5,000 bushels is $250 As a result, a five-cent change in maize is equivalent to a $250 change in a single conventional futures contract.
$600 = $0.12 5,000 bushels In terms of a single typical futures contract, a twelve-cent shift in corn would amount to a $600 move.
We can see that a one-cent change in corn is comparable to $50 if we break this estimate down further. You can calculate how much the value of a futures contract has increased or reduced by multiplying $50 per contract by the price change in cents. Furthermore, you should now be able to determine the profit or loss associated with your position.
Mini Corn Contracts
There are also corn micro contracts that can be traded. A single micro corn contract is worth $1,000 bushels, or 20% of the total contract value.
It stands to reason that the tick value of the small corn contract would be 1/5 that of the standardized contract. In the mini-corn contract, a one-cent price change would be equivalent to $10 in the conventional one.
Contract Values
The real contract value in your portfolio is equally as significant as the tick values. With a few easy calculations, here’s a quick way to figure it out:
Let’s take the previous example of corn trading at $4.50 a bushel and see what a standard futures contract would be worth in this situation.
To figure it out, multiply the market price of corn per bushel by the number of bushels in the contract. At the very least, when we have many contracts.
We would multiply $4.50 (price per bushel) * 5,000 (bushels per contract) 1 in our example (number of contracts). As a result, the contract is worth $22,500. In other words, a single regular corn futures contract worth $4.50 is worth $22 500.
Mini Corn Futures
So, how much is a single tiny corn futures contract worth? We know it’s worth 20% of the standard one’s value, and since it’s trading at the same $4.50/bushel price, we can calculate it using the following formula:
Market Price per bushel 1,000 x the number of contracts = Mini Corn Contract Value
Using the above inputs, a single small corn contract has a value of $4,500 for $4.50. (4.50 x 1,000 x 1).
What is the weight of a bushel of corn?
Before grazing cornstalks with cattle, a rough estimate of the amount of corn in the field should be made. The UNL Extension Circular EC 287 Grazing Crop Residues with Beef Cattle explains how to estimate the number of bushels of corn on the ground using a simple method.
Because an 8-inch ear of corn contains approximately 0.50 pound of shelled corn grain, 112 8-inch ears equal 1 bushel (1 bushel = 56 pounds). The amount of corn can be calculated by counting the number of ears. Count the total number of ears in three different 100-foot furrow strips and divide by two to get an approximate number of bushels per acre if corn is planted in 30-inch rows.
For example, a total of 30 ears of corn were counted throughout all three 100-foot strips after walking three 100-foot strips. The total number of ears of corn, divided by two, equals about 15 bushels of corn per acre on the ground. Half ears should be classified as little or broken ears, but an ear and a half should be counted as an ear and a half. Any amount greater than 8-10 bushels per acre will necessitate a well-thought-out grazing strategy to guarantee that grazing animals do not consume too much grain.
If it is discovered that there is too much corn on the ground, the following techniques should be implemented to help cattle grazing the cornstalks avoid stomach disturbances (acidosis), lameness, and abortions.
- Cross-fencing the field and utilizing a procedure known as “strip grazing,” where cattle are only given access to the amount of corn they should eat for the day, limit access to corn. This is the most reliable approach for limiting corn consumption. If the downed corn is on an irrigated center pivot, attaching an electric fence to the pivot and moving the pivot to move the fence is one method for strip grazing.
- Take into account the type of livestock that will be grazed. Cattle that have never grazed cornstalks before, such as weaned calves or yearlings, may take some time before aggressively seeking it out. This will allow the animals to acclimatize to the maize and acclimate. Weaned calves or yearlings can also make the best use of the corn by converting it into a marketable product as they develop and gain pounds.
- Another type of livestock that can benefit from grazing downed corn is non-pregnant cows that would benefit from gaining weight. Cull cow prices can rise periodically from late fall to early spring, enhancing the use of this resource.
- Cows who had previously grazed cornstalks will immediately seek out downed corn. Before allowing cows access to the field, they should be accustomed to eating corn. Start cows on 2-3 pounds of maize per day and gradually increase to 10-12 pounds per day over the course of 7-10 days. By acclimating cows to maize, the danger of stomach distress is reduced.
- Before letting cattle out for grazing, make sure they’re full and feed good quality hay so they don’t eat too much corn right away. Feeding palatable hay or other feed to cattle on a regular basis can also help to minimize the amount of corn consumed.
- Overeating can induce founder and bloat, thus using a Monensin supplement daily can assist to balance feed intake and lower the risk of founder and bloat.
Cattle grazing cornfields with abundant dead corn might be difficult to manage for producers. Cattle, on the other hand, can clean up and make good use of this scenario with proper planning and strategy, benefiting both the farmer and the cattle producer.
A soybean contract contains how many bushels?
Futures, options, ETFs, shares in soybean firms, and CFDs are just a few of the possibilities available to soybean traders.
Soybean Futures
A soybean futures contract is traded on the Chicago Mercantile Exchange (CME). The soybean contract settles in 5,000 bushels of soybeans, or 136 metric tons.
The CME contract is traded on the CME Globex electronic trading platform and has January, March, May, July, August, September, and November as expiration months.
Futures are a type of derivative that allows traders to make leveraged commodity price wagers. If prices fall, traders will need to deposit more margin to keep their positions open. Traders must either take physical delivery of soybeans or roll their positions forward to the next trading month when their positions expire.
Futures trading necessitates a high level of knowledge due to the impact of factors such as storage costs and interest rates on pricing.
What Are the Different Types of Soybean Futures Contracts?
Soybeans, soybean meal, and soybean oil are all traded on the CME. Each of these goods comes with its own set of specifications. This comparison of the three futures contracts was put up by us:
What is the limit on corn futures?
The CME Group is extending the daily price restrictions for Chicago Board of Trade grain and soy futures after a biennial review, and the new limits will take effect on May 2. Corn will now be limited to 40 cents per bushel, up from the current ceiling of 25 cents per bushel. Soybean limitations have been raised to one dollar per bushel, up from 70 cents previously. Soft and hard red wheat futures are both up to 45 cents per bushel, and soy meal is up to $30 per short ton. Soil oil is now 3.5 cents per pound, and soy meal is up to $30 per short ton. The maximum price range allowed for a futures contract in each trading session is defined by the CME price limits. Price limits, as well as what happens when a limit is reached, differ by product. “The Gulke Group’s Jerry Gulke believes that some of the pricing limitations have been increased by 50%. “That’s a lot of turbulence.” Gulke also told Ag Web Dot Com that the corn limit will now be 80 cents up and down. On 200-bushel corn, that’s $160 per acre. Gross income on 10,000 acres may be about $1.5 million per day. Gulke believes that now that the trading limitations have been widened even more, volatility will take on a whole new meaning in the coming months.
What method is used to quote corn futures prices?
The minimum tick in the futures market for these contracts is a quarter of a penny, or 2/8ths. As an example, if maize was trading at $4.15 1/4 (four dollars and fifteen and a quarter cents), the price on a quote board would be simply 415’2.
How are futures prices calculated?
To figure out how much a futures contract is worth, multiply the price by the number of units in the contract. To convert to dollars and cents, multiply by 100. Assume the price of coffee futures in May 2014 is 190.5 cents. 37,500 pounds equals one coffee futures contract, therefore multiply 37,500 by 190.5 and divide by 100. The coffee futures contract has a value of $71,437.50.