What is a corn basis contract?

How do corn contracts work?

Corn futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of corn (eg. 50 tonnes) at a predetermined price on a future delivery date.

How does grain basis work?

Grain Basis is the difference between the price of a commodity in the local market subtracted from the price of the commodity in the futures market. … His price at the local elevator is $4.50 per bushel. The front month for corn is May Corn and it is trading at $4.75 on the CBOT.

What is positive basis?

The basis reflects the relationship between cash price and futures price. … A positive basis is said to be “over” as the cash price is higher than the futures price. A negative basis is said to be “under” as the cash price is lower than the futures price.

How do you read a basis?

Local cash price – futures price = basis. In this example, the cash price is 20 cents lower than the December futures price. In market “lingo” you’d say the basis is “20 under December.” On the other hand, if the cash price is 20 cents higher than the December futures price, you’d say the basis is “20 over December.”

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How much is a corn future?

CBOT Corn Futures Prices

Open Low
March (next year) 272.50 271.00
May 276.25 275.00
July 278.25 277.25
Dec 253.75 252.75

How much corn is in a corn future?

Corn futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of corn (i.e. 50 tonnes) at a predetermined price on a future delivery date.

What months does corn trade in?

Principal trading months for corn futures include March, May, July, September, and December.

How do you contract corn?

The contract value is calculated by multiplying the size of the contract by the current price. For example, if December corn is trading for $4.00 per bushel and one contract is 5,000 bushels, the contract value is $20,000 ($4.00 price * 5,000 bushels = $20,000 contract value).

What will corn prices do in 2021?

Chicago corn futures last week were trading from about $5.20 to $5.75 per bushel, up 60% to 70% from a year earlier, with the December 2021 contract near $5.65 per bushel.

How are corn options priced?

Corn option contracts are available for trading at NYSE Euronext (Euronext). Euronext Corn option prices are quoted in dollars and cents per metric ton and their underlying futures are traded in lots of 50 tonnes of corn.