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Agricultural Commodity Futures Contract Specifications

Joe Parcell
Professor
Department of Agricultural and Applied Economics
Jason Franken
Former Postdoctoral Researcher
Department of Agricultural and Applied Economics

This guide provides information about commodity exchange markets and contract specifications for selected agricultural commodities common to Missouri. As an agricultural producer or agribusiness person, you need to have a clear understanding of the operation of the exchange market and to know the exact specifications of the commodity contract you are about to enter into.

Agricultural exchange information

Commodity exchanges can make extensive information resources available to you. The Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME), merged as the CME Group, have many free publications that explain topics ranging from the duties of a floor trader to understanding and using basis information. Much of this information is available on the websites of the various commodity exchanges.

Two primary regulatory bodies oversee futures and options trading: the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). See the list below for contact information.

Contract specifications

Every agricultural commodity contract has specifications unique to that commodity. Chicago Mercantile Exchange feeder and live cattle futures/options contracts have weight specifications of 50,000 pounds and 40,000 pounds, respectively, corresponding to the approximate weight of a semitrailer load of feeder and live cattle. Additionally, each commodity contract price quote is expressed differently, and changes in the price quote differ by commodity. The contract specification information listed below is intended to help producers and agribusiness persons better understand futures/options contract specifications.

Various commodities are traded at different quantity levels to accommodate small and large hedgers. For example, corn is traded in full contracts (5,000 bushels) and mini-contracts (1,000 bushels) both on the CME Group’s CBOT trading floor and through their electronic exchange system, GLOBEX. You should be aware of the difference in trading volume, or number of futures contracts traded during a given period of time, between these contracts. The mini-contract is thinly traded. Lack of adequate trading volume can cause difficulty when entering or exiting the market; however, mini-contracts can be useful to those lacking finances or the production quantity necessary to buy or sell a full contract.

Table 1 shows contract specifications for various agricultural commodities. The Futures column heading represents the commodity being traded. Contract size refers to the size of the contract being traded. Price quote refers to the units in which the price is quoted.

Deliverable vs. cash-settled commodities

Two classes of agricultural commodities typically referred to in trading are deliverable and cash-settled commodities. Deliverable commodities are those for which the short position (seller) has the right, but not the obligation, to make delivery to a specified location for which the long position (buyer) has the obligation to take delivery. For instance, corn is a deliverable commodity. A seller (short) could make delivery at one of the exchange-specified delivery locations, and the buyer (long) would have to take delivery of the corn at that location. The order of taking delivery by a long position is related to the long position holder longest in the market. For this reason, many traders holding long futures positions exit or roll forward the contracts before a futures contract enters its expiration month. Other deliverable commodities include wheat, soybeans, pork bellies and live cattle.

Cash-settled commodities are those for which a cash settlement can be made at the end of the trading period. For instance, feeder cattle are a cash-settled commodity. If you held a short position until expiration, you would not have the right to make delivery. Instead, you would cash settle your short position, much like offsetting a contract by buying. You should be aware of the settlement terms of the commodity you are trading.

Table 1. Contract specifications for select agricultural commodities.

Futures Contract size Price quote
Food and fiber
Butter 20,000 lb ¢/lb
Cheese 20,000 lb ¢/lb
Class III milk 200,000 lb ¢/cwt
Cocoa 10 metric tons $/ton
Coffee 37,500 lb $/lb
Cotton No. 2 50,000 lb $/lb
Frozen orange juice 15,000 lb ¢/lb
Random length lumber 110,000 board feet $/mbf
Sugar No. 11 112,000 lb $/lb
Grains and oilseeds
Corn 5,000 bu ¢/bu
Corn 1,000 bu ¢/bu
Distillers dried grains 100 short tons $/short ton
Oats 5,000 bu ¢/bu
Oats 1,000 bu ¢lbu
Rough rice 2,000 cwt ¢/cwt
Soybeans 5,000 bu ¢/bu
Soybeans 1,000 bu ¢/bu
Soybean meal 100 tons $/short ton
Soybean meal 50 tons $/short ton
Soybean oil 60,000 lb ¢/lb
Soybean oil 30,000 lb ¢/lb
Synthetic soybean crush 50,000 bu ¢/bu
Crude palm oil 25 metric tons $/metric ton
Wheat 5,000 bu ¢/bu
Wheat 1,000 bu ¢/bu
Livestock
Feeder cattle 50,000 lb ¢/lb
Live cattle 40,000 lb ¢/lb
Lean hogs 40,000 lb ¢/lb
Lean hogs 20,000 lb ¢/lb
Pork bellies 40,000 lb ¢/lb
Fuels
Ethanol 29,000 gal $/gal
Natural gas 10,000 mmBtu $/mmBTU
Heating oil 42,000 lb $/gal
Note
Many of these commodities have options markets that are traded based on similar contract specifications.
Abbreviations: bu = bushel; cwt = hundredweight; gal = gallon; lb = pound;
mbf = 1,000 board feet; mmBtu = million British thermal units.

Commodity exchanges

  • CME Group
    [previously Chicago Mercantile Exchange (CME)]
    [includes Chicago Board of Trade (CBOT), New York Mercantile Exchange (NYMEX) and Commodity Exchange (COMEX)]
    Toll-free: 866-716-7274
    Phone: 312-930-1000
    Fax: 312-466-4410
    http://www.cmegroup.com
    See http://www.cmegroup.com/product-codes-listing/cbot-market.html for product listings and rules by original exchange
  • Chicago Board of Trade (CBOT)
    Phone: 312-435-3500
    Fax: 312-341-3168
    http://www.cmegroup.com/company/cbot.html
  • Kansas City Board of Trade (KCBT)
    Toll-free: 800-821-5228
    Fax: 816-753-3944
    http://www.kcbt.com
  • ICE Futures U.S.
    [previously New York Board of Trade (NYBOT); New York Cotton Exchange (NYCE) prior to that]
    Phone: 212-748-4000
    https://www.theice.com

Regulatory bodies

  • Commodity Futures Trading Commission (CFTC)
    Phone: 202-418-5080
    Fax: 202-418-5525
    http://www.cftc.gov
  • National Futures Association (NFA)
    Toll-free: 800-621-3570
    Fax: 312-781-1467
    http://www.nfa.futures.org
Original authors
Joe Parcell and Vern Pierce, formerly of the Department of Agricultural Economics

G601, revised August 2011


G601 Agricultural Commodity Futures Contract Specifications | University of Missouri Extension