What are corn futures?
Corn futures are CFTC-regulated, exchange-traded contracts on the Chicago Board of Trade (CBOT) and are one of the top 5 most-commonly traded commodity futures. Corn is the most widely grown crop across the United States, and corn futures contracts are the most active market in grains and oilseeds. The greatest use for corn is as a basis for livestock and poultry feed. But corn also serves as an important ingredient in many of the foods we eat every day - corn oil for margarine, corn starch for gravy, and corn sweeteners for soft drinks, just to name a few. Nonfood uses of corn include alcohol for ethanol fuel, absorbing agents for disposable diapers, and adhesives for paper products.
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How to trade corn futures
Corn futures are traded electronically on the Globex® platform from 8:00 p.m. U.S. ET to 2:20 p.m. U.S. ET on the following day, at 5,000 bushels per contract. An account approved to trade futures is required in order to trade corn futures.
Corn futures contract specifications
Considering trading corn futures? Here are the corn futures contract specifications.
|Exchange||Chicago Board of Trade, C|
|Contract Size||5,000 bushels|
|Minimum Tick Size and Value||0.25, worth $12.50 per contract.|
|Trading Times||Corn futures are traded electronically on the Globex® platform from 8:00 p.m. U.S. ET to 2:20 p.m. U.S. ET on the following day. Please note that there is a maintenance period from 8:45 a.m. U.S. ET until 9:30 a.m. U.S. ET during which trading is halted.|
|Principal Trading Months||Principal trading months for corn futures include March, May, July, September, and December.|
At Schwab, you also get access to advanced trading platforms and education, where you can take advantage of market research, real-time corn futures quotes, and other specialized tools.
Investors can use softs like corn futures to hedge or diversify their portfolio using investments that have a low correlation with their financial assets. Since corn futures are priced in U.S. dollars, the performance of the U.S. economy plays a crucial role in their pricing, providing a way for investors to use corn futures as a hedge against inflation concerns.
Traders can use corn futures to speculate on the price of corn, which can change based on a number of different factors including fluctuations of crop output by farmers due to weather events, changes in demand of the grain due to consumer trends, changes in demand for fuel including ethanol-based fuel additives, and changes in government subsidy or tax policies, and the value of the U.S. dollar.
It is important to understand the benefits and risks involved with corn futures before placing a futures trade. Compared to traditional investments, with corn futures you can trade outside of the traditional market hours associated with equities and take advantage of trading opportunities regardless of market direction. Corn futures also provide the ability to trade with greater leverage and allow a more efficient use of trading capital. However, trading leveraged products like corn futures also involves the risk that losses can exceed the amount originally invested and may not be suitable for all investors.
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