The year 1870 marked the introduction of the octagon shaped trading pits at the exchanges as we’ve come to know them today. At that time there wasn’t an official market for trading wheat futures, but much has changed since then. In the 1920s, the predecessors to the Commodity Futures Trading Commission (CFTC) banned grain futures trading on non designated exchanges. Consolidation and formalization of the futures industry was a huge step for the industry. Exchange and product innovation came a long way in the 19th century. As a result, individuals who are, or plan on trading wheat futures markets have a variety of choices in choosing the contract that suits them best. Understanding and choosing the contracts that best suits your trading needs and financial circumstances is an important step for your career trading wheat markets.
There are two wheat futures contracts offered by the Chicago Board of Trade (CBOT): the full size contract and the mini sized contract. There specifications are as follows:
| Wheat | |
| Symbol (OO, Elect.) | W, ZW |
| Contract Size | 5,000 bushels |
| Open Outcry Hours | 9:30 AM to 1:15 PM Mon.- Fri. |
| Electronic Hours | 9:30 AM to 1:15 PM and 6:00 PM to 6:00 AM Sun.- Fri. |
| Minimum Tick | $.0025 /bushel ($12.50 /contract) |
| Contract Months | H, K, N, U, Z |
| Daily Limit | 60 cents |
| Margin |
$3,375 |
| Options | Yes |
| Mini Wheat | |
| Symbol (OO, Elect.) | YW, XW |
| Contract Size | 1,000 bushels |
| Open Outcry Hours | 9:30 AM to 1:45 PM Mon.- Fri. |
| Electronic Hours | 9:30 AM to 1:45 PM and 6:00 PM to 6:00 AM Sun.- Fri. |
| Minimum Tick | $.00125 /bushel ($1.25 /contract) |
| Contract Months | H, K, N, U, Z |
| Daily Limit | 60 cents |
| Margin |
$675 |
| Options Available | No |
(All time are CST)
The largest difference between the two comes from their contract size. Smaller margins and value of price movements can be very helpful attributes while you learn the ropes of trading wheat. Essentially, you would need less starting capital and your mistakes won’t hurt the value of your portfolio as much as a large contract. That could potentially be the difference between possibly making it and not making it as a wheat trader. Some of the other aspects that differentiate the two contracts include the differences in trading hours of the day sessions. Trading wheat mini contracts is extended until 1:45. There are not any options on futures offered for the mini contract. For those of you who had some grandiose ideas on options trading strategies for the mini wheat contracts, you’re out of luck. The rest of you can look at the different specifications and decide exactly what it is you’re looking for in a wheat contract.
(CBOT: Education: Contract Specifications)
(CBOT: About CBOT: Our History)
Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.
