Trading Grain Futures: Wheat, Soybean, and Corn Markets

Many investors in Grain Markets have to face with the wild moves in Grain Markets and this will cause those investors to encounter the obstacles in Futures Trading Grains. To get through these problems, the investors have to find new strategy for trading in Grain Markets. Calendar spreads are popular with professional grain traders, but the strategy can be applied by any trader, in other markets.
It will be tough for both new and experienced traders and investors in Trading Grain Futures. When the Grain Markets make some big moves, the best traders and investors can get stuck in those things. Volatility can be both great and problematic for traders in Grain Markets. However, there are a lot of factors affecting prices action; those are unpredictable and have little to do with technical or fundamental market factors.
Activity of hedge funds and index funds, as well as daily fluctuations in world currencies will be the factors that can impact and influence on the volatility. In addition, price action in Grain Markets can be impacted in the negative way by those factors. When there are those types of conditions occur, a lot of people have to find the solution for problems even though they don’t have experience trading spreads.
However, the action in world currency markets rarely affects the price movement in spreads that is generally more true to fundamental market factors—basic supply and demand. For any reason, we can use the strategy whether we are bullish or bearish a particular market. We would buy the closer-dated month contract and sell the deferred month contract in the case we are bullish. There is a “cost of carry” involved for holding that longer-dated contract. The strategy is essentially a cost-of-carry spread. Those things we are looking for the differential move are contracts.
The action of a spread will likely be affected by a big move in the Futures Markets. That is why many Grain investors and traders prefer trading spreads to trading outright futures contracts. However, that strategy is not always useful for us to make profit. Like any other trade, we may have to bear risk factors and parameters in mind.

Margin Requirements

Outright futures positions will be less favorable for spread trades versus margins. The exchanges have acknowledged that there is less risk in trading certain spreads than the outright futures contracts. Therefore, it’s not cheap for us to initiate and maintain our position when we trade a spread, and we won’t tie up as much funds as we would with outright futures positions.
“Soybean futures margin $3,713 per contract.
Soybean July/November spread margin $1,215 initial/$900 maintenance (five or less)
Corn margin $1,350 per contract
Corn July/December spread margin $270 initial/$200 maintenance (five or less)
Wheat margin $2,025 per contract
Wheat May/December spread margin $270 initial/$200 maintenance (five or less)”

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Commodity Grain Prices

When we look at the charts above, we can easily find out that the prices of commodity grain is changing continually or just say fluctuating. For more information, just click Grain Futures

How about the Grain Commodity Futures - Corn Futures, Wheat Futures, Rice Futures ? That is the most import thing for traders to successfully run business.
No matter how the reason is, the price of the same bushel of the same Grain at the same moment in the cash market has been lower than the price for a bushel of Grain established in the public derivatives markets has been substantially.
When that occurs, nobody can be exactly sure which price accurately reflects demand and supply in these important commodity markets, the problem that can influence food prices and production decisions around the world. “Prices set in the U.S. markets are used as benchmarks for Grain Prices globally.”
These disparities also raise the question of whether farmers, who rely almost exclusively on the cash market, are being shortchanged by cash prices that are lower than the derivatives market says they should be.
"We do not have a clear understanding of what is driving these episodic instances," said Scott Irwin, one of three economists at the University of Illinois at Urbana-Champaign who have done extensive research on these price distortions.
Irwin and his colleagues, Philip Garcia and Darrel Good, first raised the alarm about these price distortions last May, in a study financed by the Chicago Board of Trade. Their findings drew little attention then, Irwin said, but lately "people have begun to get very seriously interested in why this is happening - because it is a fundamental problem in markets that have always worked very well."
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Grain Futures: Wheat, Soybean, and Corn Markets

There are agreements between buyers and buyers about Grain Futures Contracts; they can choose to take delivery of the underlying commodity as a specified price & date. There is a standard size in each of contract. Soybean, Corn, and Wheat Contracts, the popular contracts, are all worth 5,000 bushel. With the associated CBOT mini contracts, they have a 1,000 bushel value.
After Commodity Grain Futures Contracts are traded, they will be done with leverage. In other words, the traders and investors do not have to put up the full monetary value of the contract that is derived from price times contract size. The amount of capital required to keep futures contract is named the margin. In addition, the contract size and price of the underlying commodity will decide the margin rate; however, there are a number of other factors that influence on this formula.

The maintenance margin is less than the initial margin. The time frame that defines each will vary between commodities, but the maintenance margin is the amount needed to hold the position after the initial period & the initial margin is the capital required to open the position. Margin requirements are more for speculative than they are for hedgers’ and exchange members’ positions. When Trading Grain in future, traders have to base on the margin; it is possible to lose more than your initial investment because futures are traded on margin. Traders will receive a margin call if this happens, or is in danger of happening as a result of a deteriorating capital to leverage ratio. In this situation, either an account refunding or forced liquidation is necessary. Margin calls should be avoided at all costs as they are very destructive on a capital base of trader. However, sometimes they cannot be avoided.

“Looking at the basics of Commodity Grain Futures Markets is a good first step towards learning about trading. Comprehending how and why contract specifications are derived is an essential part of the required knowledge base. Take a step towards learning about the corn market in special Futures Press Report by clicking FREE INSTANT CORN REPORT.”
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