Futures are standardized contracts for the purchase and sale of physical commodities for future delivery.  All transactions must take place on a regulated commodity futures exchange.  Contracts are standardized according to quality, quantity, and delivery time period. Price for each contract is discovered through an auction-like process that occurs at the exchange the specific commodity is listed.

Contract Specifications:

Corn:

1 contract = 5,000 Bushels

Minimum Price Fluctuation = 1/4 of one cent per bushel ($12.50 per contract)

Contract Months = March, May, July, September, December

Maximum daily price move = 25 cents (set by the CME)

Soybeans:

1 contract = 5,000 Bushels

Minimum Price Fluctuation = 1/4 of one cent per bushel ($12.50 per contract)

Contract Months = January, March, May, July, August, September, November

Maximum daily price move = 60 cents (Set by the CME)

Key Terms:

Commission Fee – Cost associated with executing futures and options transactions.

Long – Buyer of futures

Short – Seller of futures

Market Order – Order to immediately buy or sell at best available current market price.

Limit Order – Order to buy or sell at a specific price or better.

Open Order – Also known as “Good-Til-Cancelled”(GTC) is an order to buy or sell that  remains in effect until canceled or the order expires.