Investing in Corn through the Futures Markets - dummies

Investing in Corn through the Futures Markets

The most direct way to invest in corn is by going through the futures markets. A corn contract exists, courtesy of the Chicago Board of Trade (CBOT), to help farmers, consumers, and investors manage and profit from the underlying market opportunities.

Here are the contract specs for corn investments:

  • Contract ticker symbol: C

  • Electronic ticker: ZC

  • Contract size: 5,000 bushels

  • Underlying commodity: High grade No. 2 or No. 3 yellow corn

  • Price fluctuation: $0.0025/bushel ($12.50 per contract)

  • Trading hours: 9:05 a.m. to 1:00 p.m. open outcry; 6:30 p.m. to 6:00 a.m. electronic (Chicago Time)

  • Trading months: March, May, July, September, December

Both high-grade number 2 and number 3 yellow corn are traded in the futures markets. In addition, corn futures contracts are usually measured in bushels. Large-scale corn production and consumption is generally measured in metric tons.

Historically, the United States has dominated the corn markets, and still does due to abundant land and helpful governmental subsidies. China is also a major player and exhibits a lot of potential for being a market leader in the coming years. Other notable producers include Brazil, Mexico, Argentina, and France.

Top Corn Producers
Country Production (Tons)
United States 282,300,000
China 139,400,000
Brazil 41,700,000
Mexico 19,500,000
Argentina 15,800,000
France 13,200,000

Source: U.S. Department of Agriculture, 2006 figures

Like other agricultural commodities, corn is subject to seasonal and cyclical factors that have a direct, and often powerful, effect on prices. Prices for corn can go through roller coaster rides, with wild swings in short periods of time.

For more information on the corn markets, check out the following resources on the Web: