A grain futures contract is a legally binding agreement for the delivery of grain at a specified price in the future. A futures exchange standardizes the contracts in terms of quantity, quality, delivery time, and location. The only variation is the price.
How do you go about purchasing grain futures?
Wheat futures contracts are traded electronically through Schwab and are offered by the CBOT on the Globex trading platform. To trade wheat futures, you’ll need a futures account that has been approved.
What is the process of trading grain futures?
A grain futures contract is a legally binding agreement for the delivery of grain at a specified price in the future. A futures exchange standardizes the contracts in terms of quantity, quality, delivery time, and location. The only variation is the price.
Grain futures are traded where?
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.
What is the weight of a corn contract?
Every futures contract, like any other product that is purchased and sold, requires both a seller and a buyer willing to trade a contract at an agreed-upon price.
For example, if Farmer Sam sells a December corn futures contract for $4.50 per bushel, the contract buyer will also buy a December corn futures contract for $4.50 per bushel. As the seller, Sam has committed to a $4.50 selling price for 5,000 bushels of corn that he will deliver in December, while the buyer has committed to a $4.50 purchase price for 5,000 bushels of corn that she will receive in December.
The physical corn has not moved at this time. The seller and buyer have just agreed to transact in the future.
*Think of it like a wireless carrier’s cell phone contract. Assume your parents have chosen a cell phone plan that will cost them $250 per month for the next two years. Even if the wireless company’s same cell phone plan becomes more expensive over the two-year period, your parents will not pay more than the agreed-upon $250/month price because both the seller (wireless carrier) and the buyer (your parents) have agreed to it.
The terms of futures contracts are standardized, which means they do not alter. This makes trading a breeze. For example, one standard corn contract will always equal 5,000 bushels, and one feeder cattle contract will always equal 50,000 pounds. Agricultural commodity futures contracts are standardized in the following ways:
The price at which the contract is bought or sold is the only part of the futures contract that is not standardized. A futures exchange determines the current market price, which fluctuates as contracts are traded and supply and demand expectations move.
How do you protect yourself from rising wheat prices?
Appropriate machinery size, crop rotation, enterprise diversification, planting multiple distinct hybrids, crop insurance, and many other factors may be considered. Crop growers also have marketing strategies that might help them mitigate the financial risk of fluctuating prices.
How should I go about investing in oats?
The use of a contract for difference (CFD) derivative instrument is a common approach to trade oats. Traders can speculate on the price of oats using CFDs. The difference between the price of oats at the time of purchase and the current price is the value of a CFD.
CFDs on oats are available from a few regulated brokers throughout the world. Customers make a deposit with the broker to serve as margin.
What factors influence grain prices?
Farmers seek to get the best possible price for their grains. Grain prices are determined by two separate markets. A commodity exchange trades futures contracts for a specific delivery month. The Chicago Mercantile Exchange includes the Chicago Board of Trade, which is where various commodities are traded. Wheat, corn, and soybeans all have the same contract standards, and each crop is graded for kind and quality. Every grain is exchanged in bushels, with control prices expressed in cents per bushel.
Is it possible to buy wheat on the stock exchange?
Wheat commodity trading can take place on a variety of platforms, although the Chicago Board of Trade (CBOT) and NYSE Euronext are the two largest exchanges that trade wheat futures (Euronext). Wheat futures are priced in US dollars and cents per bushel. Trading hours and other information for wheat:
Wheat is a common food staple that can withstand extreme temperatures.
Wheat production also has the advantage of being able to harvest the grain in a relatively short amount of time, and there is such a ready supply of wheat that, although coming in second to maize, it is a critical component of the global commodities trading network. When trading wheat, these factors contribute to the rising demand for the product.