Corn futures quotes are an interesting first for corn producers, buyers, and processors. With its help they transfer a part of their risks to other market participants. But these derivatives are highly liquid around the world, making them attractive to traders and investors even for short positions. Follow corn futures news at letizo.com.
Parameters of corn futures quotes
The most liquid corn futures contracts are traded on the CBOT:
- The ticker is ZC.
- The volume is 5000 bushels (about 127 tons).
- The minimal step is 0.25 US cents for 1 bushel or $12.5 for 1 futures.
- The benchmark commodity is yellow-grain corn for No.2. If there is a delivery of the crop for #1 or #3, then the buyer has to make an extra payment for the first one — 1.5 US cents per 1 bushel, and for the second one they get a discount.
- The value is equal to 100 bushels of the crop.
- The contracts are delivered five times a year.
- Corn is traded openly from Monday through Friday.
Corn contracts are the most traded of all crops on the CME Group trading floor. Daily trading volume is 300000 on average. Corn is the only agricultural securities, which were included in the TOP-10 list. If we compare corn with other popular agricultural assets, the transactions in this crop are twice as much as soybeans and three times as much as wheat.
It is worth noting that the cost on the contracts becomes on the world markets. As an alternative investment option, you might consider Ultra T Bond futures.
Factors influencing the price of corn futures
- For traders, investors and hedgers, WASDE reports are primarily important. They are published each month. In addition to this information, one should follow Grain Stocks reports that inform about corn volumes in stock. Crop Progress also regularly publishes information about how mature the corn is. A set of these indicators will help market participants navigate the market in a timely and competent manner.
- Weather conditions in producer countries. Warmth is necessary for good growth and development of this crop. The temperature range of 20 to 25 degrees is considered the most optimal. Even short-term and small frosts damage the crop. Therefore, reports by meteorologists about abnormal conditions in the producing countries make farmers and traders alike worry a lot. It is especially important to check weather conditions during the sowing and growing season, i.e., from the beginning of spring through summer.
- Supply-to-demand ratio. It is obvious that if there is a high demand for corn and not enough supply, prices will go up. And vice versa, if the crop is abundant on the market and the demand is low, the cost will fall. Also, at some point in time, crops with a lower price may be in demand.
- Central bank policies (mainly those of the U.S. and China). The prices of all crops, including corn, may begin to rise if the governments of the producing countries announce soft monetary policies or cut interest rates.
- Correlation with contracts for other agricultural industry assets. There is a close correlation between corn and wheat. It is explained by the fact that these grains are grown in the same states. There is also a correlation between corn prices and meat prices, since this cereal is a feed for livestock. For example, in the U.S. alone, more than 55% of forage is corn.
- Those traders who want to work with corn contracts need to understand that there is a cyclical annual pattern. After the end of the crop harvest (late summer through September) and before the next year’s crop is reported, the security’s value rises steadily as the market is in a state of uncertainty. But if after the corn harvest the information about future crops is advertised immediately, prices begin to creep downward. When it’s off-season for corn trading, we suggest analyzing the Ultra T-Bond forecast as an investment tool.