Trading Grain Futures Contracts : NobleTrading Blog

Friday, August 15, 2008

Trading Grain Futures Contracts

Prices of agricultural commodities like wheat, oats, rice, soybeans and corn rise and fall with news, weather, and local and international economic changes. Grain futures contracts are a good way of profiting from this ever changing grain prices. Grain futures are widely traded in different markets of the world by both hedgers and speculators.

Grain futures contracts offer all the benefit of futures such as standardized contracts for quantity and quality, trading on leverage money, easiness to go long and short, and hedging against risk. Grain futures market is fairly liquid with comparatively less volatility, and low margin trading requirements. Grains futures aren’t very big contracts; their total dollar amount is considerably less than most energy and equity futures.

The contract specifications of some of the most traded grain futures in CBOT are listed below.

Corns: Most traded grain futures in terms of volume. Contract size is 5,000 bushels (around 127 metric tons). Minimum tick size $0.0025 or $12.50 per contract. Maximum daily price movement $0.20 per bushel. Actively traded in March, May, July, Sep and Dec.
Wheat: One of the most volatile grains. Contract size 5,000 bushels, minimum tick size $0.0025 or $12.50 per contract. Max daily price movement limit $0.30. Actively traded in March, May, July, Sep and Dec.
Soybeans: Most volatile grain and most popular oilseed. Contract size 5,000 bushels, tick size $0.0001 or $6 per contract. Maximum daily price limit $0.50 and actively traded in March, May, July, Aug, Sep, Oct and Dec.
Oats: Oats have low daily trading volume. Contract size 5,000 bushels, tick size $0.0025, maximum daily price limit $0.20, and actively traded in March, May, July, Sep and Dec.