Corn Futures

A futures contract is an agreement in which the buyer commits to purchasing a certain item for a predefined price on a specified date in the future. In basic terms, a future is simply a contract that is similar to a bet, in which the buyer is speculating on the future price direction or value of a particular item. Futures contracts were originally utilized by farmers and commodity traders as a form of protection against market instabilities and volatile prices. However, nowadays the majority of futures are used to hedge/complement foreign exchange transactions and stock market index investments. In fact, the majority of US based corporations that engage in international business utilize futures contracts to protect themselves from fluctuations in the value of the US dollar. Nonetheless, there are still many investors that earn a decent living by trading commodity futures on a regular basis. Some of the most popular and profitable commodity futures being traded are corn futures, which are briefly reviewed in the following paragraphs.

Corn Futures Delivery Dates and Statistics
Corn futures are currently traded on the CBT (Chicago Board of Trade) and are indicated by the ticker symbol “C” (the ticker symbol “ZC” is used when electronic corn futures trades are conducted). The value of the corn futures are listed in terms of pennies per bushel, and are often displayed on a variety of charts that display the previous and recent market data related to corn futures. Corn futures delivery dates occur in five months out of the year (December, September, July, May, and March). The delivery date, also commonly referred to as the final settlement date, is the date listed on the futures contract on which the underlying commodity must be delivered in order for the contract to be fulfilled.

Corn Futures Contract Sizes and Daily Limits
Corn futures are sold in units of 5000 bushels on the CBT (Chicago Board of Trade). The daily limit on price for corn futures is currently 30 cents per bushel, however this limit can be expanded to 45 cents per bushel in certain circumstances. If the corn futures market closes at the limit offer or limit bid then the daily limit on price per bushel may be raised to as much as 70 cents per bushel. It is important to note that price limits do not apply to a contracts that are initiated within the current delivery month. Daily price limits help stabilize the market and reduce the risk of price volatility – a factor that futures were originally intended to mitigate. The restrictive effects of daily price limits can be minimized by purchasing large amounts of corn futures, or by diversifying your investment into other commodity futures.

Corn Futures Trading Hours and Deliverable Grades
Corn futures are physically traded on the Chicago Board of Trade floor within pit sessions that take place between Monday-Friday, from 10:30 AM-2:15 PM, Eastern Standard Time. Corn futures are also traded electronically via the CME Globex online trading platform Sunday-Friday during the hours of 7 PM-7 AM, Eastern Standard Time. Corn futures cannot be traded on the CBT after the day before the 15th calendar date of the contract month. There are several deliverable grades of corn that are delivered through futures contracts on the CBT. #2 Yellow grade corn is sold at regular contract price, while #1 yellow grade corn is sold at one and a half cent per bushel higher. #3 yellow grade corn is sold at one and a half cent per bushel discount, as it is the lowest deliverable grade for corn futures.

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