7 Things to Know Before You Start Trading Wheat Futures

Author: Joseph Easton, Senior Broker atCannon Trading

1. The Basics:

There are two types of Wheat most commonly traded

Chicago Soft Red Winter (SRW) and KC Hard Red Winter (HRW) are the global industry standards for wheat. Chicago SRW Wheat is the most liquid Wheat futures contract in the world, trading the equivalent of more than 15 million tons each day in 2013--9 times more than the largest European contract. Producers, processors, millers and exporters continue to look to Chicago SRW and KC HRW Wheat for the liquidity that is critical for any risk management solution.

Liquidity means that you can execute positions quickly, effectively and efficiently. Liquidity offers more flexibility in structuring hedging strategies to meet your timing and market needs. And when the world is facing new challenges in Wheat risk management, liquidity provides the security you need in order to respond with confidence - CME Group

Types of Wheat Futures: Chicago SRW Wheat Futures and KC HRW Wheat Futures

Contract specifications: One contract (5,000 bushels) of deliverable (~ 136 Metric Tons)

Common Symbol: CME Globex: ZW and CME Globex: KE

2. Market Movements and Trading hours:

Move per tick: 1/4 cent per bushel ($12.50 per contract)

One cent is equal to $50 per contract and $1.00 move is $5000 per contract

Trading hours: Sunday Friday, 7:00 p.m. 7:45 a.m. CT and Monday Friday, 8:30 a.m. 1:20 p.m. CT

In summary the market is basically open twice a day; Once at night or GLOBEX and once during the day, also known as the pit session.

Recently the close for the day has been extended from 1:15 p.m. CT to 1:20 CT.

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