What You Have to Know

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Agriculture futures provide market contributors an enormous array of hedging and speculative prospects. Whether or not you’re buying and selling Chicago Mercantile Change (CME) soybean, wheat, or dwell cattle futures, there’s all the time a deep, risky market at your disposal.

A number of the finest alternatives for ag merchants are within the corn futures market. Learn on to rapidly stand up to hurry on the ins and outs of buying and selling maize derivatives.

CME Corn Futures

Relating to buying and selling corn derivatives, the CME’s lineup of merchandise leads the pack. Supplied by a CME subsidiary, the Chicago Board of Commerce (CBOT), two corn listings are featured: full-sized and mini corn futures.

CME Full-Sized Corn (ZC)

Full-sized CME corn (ZC) is without doubt one of the hottest grain and oilseed contracts on the planet. For 2021, the ZC contract posted a median every day quantity (ADV) upward of 350,000 and a peak open curiosity (OI) within the neighborhood of 1.7 million. Given these strong stats, full-sized corn is an exceedingly liquid market.

Listed here are the full-sized corn contract specs:

Image ZC
Market CME Globex
Dimension 5,000 Bushels
Minimal Tick ¼ of 1 cent ($0.0025)
Tick Worth $12.50 per tick
Listings 9 month-to-month contracts of March, Might, and September.

Eight month-to-month contracts of July and December are listed yearly after termination of the present 12 months December contract.

Settlement Bodily Supply
Buying and selling Hours Sunday-Friday 8 p.m. to eight:45 a.m. EST.

Monday-Friday 9:30 a.m. to 2:45 p.m. EST.

Notice: A buying and selling at settlement (TAS) contract is obtainable for full-sized corn futures beneath the image ZCT.

CME Mini Corn (XC)

For merchants on the lookout for a solution to safe diminished corn market publicity, the CME gives the mini corn contract. At one-fifth the dimensions of full-sized corn, mini corn futures present the retail sector with enhanced granularity and a vastly diminished threat profile.

Listed here are the contract specs for CME mini corn:

Image XC
Market CME Globex
Dimension 1,000 Bushels
Minimal Tick ⅛ of 1 cent ($0.0025)
Tick Worth $1.25 per tick
Listings 9 month-to-month contracts of March, Might, and September.

Eight month-to-month contracts of July and December are listed yearly after termination of the current-year December contract.

Settlement Bodily Supply
Buying and selling Hours Sunday-Friday 8 p.m. to eight:45 a.m. EST.

Monday-Friday 9:30 a.m. to 2:45 p.m. EST.

Corn Market Drivers

Like all different commodities, corn futures function a group of distinctive underpinnings. In reality, most corn merchants and producers scrutinize the 2 following market drivers when looking for their monetary aims.

Provide & Demand

The U.S. is the world’s largest corn producer, exporting 10-20 p.c of its annual output. Greater than 90 million acres are planted with corn within the U.S., with a majority being situated within the Corn Belt. This can be a key factor of the worldwide provide and demand image as a result of corn is a number one worldwide foodstuff, with 45.4 billion bushels forecast to have been consumed between October 2020 and September 2021.

Given a continuing demand for meals and power (ethanol), corn provides have a significant influence on pricing. Thus, hostile climate occasions comparable to flooding or drought can severely cut back planted acres and output. Annual crop carryover ranges may ship corn costs up or down.

Market contributors incessantly use corn futures to handle perceived supply-demand disequilibrium. The next are probably the most fundamental types of these methods:

  • Bullish: If corn costs are anticipated to rise (demand is bigger than provide), market contributors could determine to go lengthy ZC. Given this state of affairs, merchants would purchase a deferred-month ZC contract in anticipation of a sustained rally in value.
  • Bearish: Within the occasion that corn costs are anticipated to fall (demand is lower than provide), market contributors could determine to quick ZC. To perform this, merchants would promote deferred-month ZC contracts in anticipation of a sustained downtrend in value.

USD Power

Like all different commodities, corn costs exhibit sensitivity and a robust destructive correlation to the USD. Typically talking, when the USD strengthens, the worth of corn falls. In distinction, when the dollar weakens, corn costs are likely to rally.

From a sensible standpoint, there are various causes for a robust or weak greenback. Just a few of the biggest are central banking coverage, U.S. financial efficiency, or outliers such because the COVID-19 pandemic. Nevertheless, irrespective of the state of the USD, corn futures can be utilized to handle the greenback. Right here’s how:

  • Inflation hedge: During times of USD devaluation, traders usually purchase corn to hedge in opposition to inflation. Accordingly, going lengthy ZC or shopping for name choices are viable inflationary methods.
  • Hawkish hedge: Quantitative tightening happens when the U.S. Federal Reserve (Fed) decides to lift charges, restrict entry to credit score, and cut back the cash provide. Amid such insurance policies, the USD is poised to achieve worth. In response, market contributors usually quick commodities comparable to corn. To take action, one can promote ZC futures or purchase ZC put choices to capitalize on forthcoming bearish corn pricing.

Prosper within the Current by Studying from the Previous

Those that don’t know historical past are doomed to repeat it. The StoneX e-book Planting Disaster 2019 reveals us precisely how the evolving supply-and-demand dynamic can sway corn costs dramatically. Don’t wait! Study the teachings of 2019 by signing up on your free copy right now!

Consult with one of our ag specialists



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