1 Channeling Investments through Wheat - ITRADER Commodities

Channeling Investments through Wheat

Grain Future Contracts

Those who are interested in trading in futures, specifically grain future contracts should be aware of the potential loss and its significance. This kind of investment is not applicable for all traders due to investors being at risk of losing more than what was originally invested which is why only something called risk capital should be used for investment.

Grain future contracts function as a legally binding agreement regarding the delivery of grain in the future at an accepted price. Future contracts are set by futures exchange and are categorized into quantity, quality, the time and place of delivery. The only that changes is the price.

Advantages of the Grain Contracts

Due to its tangibility as a commodity, the grains market possesses a wide variety of unique qualities. The first is their lower margin compared to others such as energies thus making them more accommodating towards spectators. In addition, grains are not necessarily one of the big contracts in terms of total dollar amount, which is another reason behind its lower margins.
Much like the other commodities, the price of grains is simply determined by the fundamental rule of supply and demand although factors such as weather also have their impact on prices.

Wheat Futures Contracts

Wheat’s use is not solely anchored to being simple animal feed. This type of grain commodity also has its uses for the flour of breads, pastas, and many more.
A delivery of wheat contract delivery consists of 5,000 bushels. This commodity is traded in both dollars and cents with a tick size of a quarter cent or $0.0025. Like the other products, wheat is traded in the Chicago Board of Trade (CBOT). A single movement in tick price will result in a change of $12.50 in the contract.
Wheat’s most active months are March, May, July, September, and December. Position limits are also applicable to wheat with the daily price limit being at 30 cents.