Agricultural Commodity Futures: Contract Specifications
Joe Parcell and Vern Pierce
Department of Agricultural Economics
This guide provides information about commodity exchange markets and contract specifications for selected agricultural commodities common to Missouri. It is important that you as an agricultural producer have a clear understanding of the operation of the exchange market and know exactly the 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 and Chicago Mercantile Exchange 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 at the Web sites 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.
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 agribusinesses better understand futures/options contract specifications.
Various commodities are traded at more than one commodity exchange. For example, corn is traded at the Chicago Board of Trade and MidAmerica Commodity Exchange. The difference in these contracts is that the Chicago Board of Trade contract is for 5,000 bushels (full contract) of corn per contract and the MidAmerica Commodity Exchange contract is for 1,000 bushels (mini-contract). You should be aware of the difference in trading volume between these markets. 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 purchase or sell a full contract.
Table 1 shows contract specifications for various agricultural commodities. The Futures column heading represents the commodity being traded. Exchange refers to the commodity exchange where the listed commodity is traded. Contract size refers to the size of the contract being traded. Trading hours refers to the hours of trading of that commodity at the given commodity exchange. Minimum fluctuation refers to the change in overall value of the contract from a unit movement in the price quoted (for instance, if the CBOT corn price increases by 1/4 cent, the contract increases in value by $12.50, $0.0025 x 5000 bushels).
Table 1
Contract specifications for selected agricultural commodities
| Futures |
Exchange |
Contract size |
Trading hours |
Minimum fluctuation |
| Food and fiber |
| Butter |
CME |
40,000 pounds |
8:00-13:10 |
2.5¢ per hundredweight = $10.00 |
| Cheddar cheese |
CME |
40,000 pounds |
8:00-13:10 |
2.5¢ per hundredweight = $10.00 |
| Cotton, number 2 |
NYCE |
50,000 pounds |
9:30-13:40 |
1/10¢ per hundredweight = $50.00 |
| BFP Milk |
CME |
200,000 pounds |
8:00-13:10 |
1¢ per hundredweight = $200.00 |
| Grains and oilseeds |
| Corn |
CBOT |
5,000 bushels |
9:30-13:15 |
1/4¢ per bushel = $12.50 |
| Corn |
MACE |
1,000 bushels |
9:30-13:45 |
1/8¢ per bushel = $1.25 |
| Oats |
CBOT |
5,000 bushels |
9:30-13:15 |
1/4¢ per bushel = $12.50 |
| Oats |
MACE |
1,000 bushels |
9:30-13:45 |
1/8¢ per bushel = $1.25 |
| Rough rice |
CBOT |
2,000 hundredweight |
9:15-13:30 |
1/2¢ per hundredweight = $10.00 |
| Soybeans |
CBOT |
5,000 bushels |
9:30-13:15 |
1/4¢ per bushel = $12.50 |
| Soybeans |
MACE |
1,000 bushels |
9:30-13:45 |
1/8¢ per bushel = $1.25 |
| Soybean meal |
CBOT |
100 tons |
9:30-13:15 |
10¢ per ton = $1.00 |
| Soybean meal |
MACE |
50 tons |
9:30-13:45 |
10¢ per ton = $5.00 |
| Soybean oil |
CBOT |
60,000 pounds |
9:30-13:15 |
1¢ per hundredweight = $6.00 |
| Soybean oil |
MACE |
30,000 pounds |
9:30-13:45 |
1¢ per hundredweight = $3.00 |
| Wheat |
CBOT |
5,000 bushels |
9:30-13:15 |
1/4¢ per bushel = $12.50 |
| Wheat |
KCBT |
5,000 bushels |
9:30-13:15 |
1/4¢ per bushel = $12.50 |
| Wheat |
MACE |
1,000 bushels |
9:30-13:45 |
1/8¢ per bushel = $1.25 |
| Livestock |
| Feeder cattle |
CME |
50,000 pounds |
9:05-13:00 |
2.5¢ per hundredweight = $12.50 |
| Live cattle |
CME |
40,000 pounds |
9:05-13:00 |
2.5¢ per hundredweight = $10.00 |
| Cattle |
MACE |
20,000 pounds |
9:05-13:15 |
2.5¢ per hundredweight = $5.00 |
| Boneless beef |
CME |
20,000 pounds |
8:50-13:00 |
1/10¢ per hundredweight = $20.00 |
| Boneless beef trimmings |
CME |
20,000 pounds |
8:50-13:00 |
1/10¢ per hundredweight = $20.00 |
| Stocker cattle |
CME |
25,000 pounds |
9:10-13:05 |
5¢ per hundredweight = $12.50 |
| Lean hogs |
CME |
40,000 pounds |
9:10-13:00 |
2.5¢ per hundredweight = $10.00 |
| Lean hogs |
MACE |
20,000 pounds |
9:10-13:15 |
2.5¢ per hundredweight = $5.00 |
| Pork bellies |
CME |
40,000 pounds |
9:10-13:00 |
2.5¢ per hundredweight = $10.00 |
Note
Many of these commodities have options markets that are traded based on similar contract specifications.
Deliverable versus 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 specified delivery locations, and the buyer (long) would have to take delivery of the corn at that location. 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-traded 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.
Commodity exchanges
- Chicago Mercantile Exchange (CME)
312-930-1000
Fax 312-466-4410
www.cme.com
- Kansas City Board of Trade (KCBT)
800-821-5228
Fax 816-753-3944
www.kcbt.com
- Chicago Board of Trade (CBOT)
312-435-3500
Fax 312-341-3168
www.cbot.com
- New York Board of Trade
(New York Cotton Exchange, NYCE)
212-748-3365
www.nybot.com
Regulatory bodies
- Commodity Futures Trading Commission (CFTC)
202-418-5080
Fax 202-418-5525
www.cftc.gov
- National Futures Association (NFA)
800-621-3570
Fax 312-781-1467
www.nfa.futures.org
G601, new December 2000