Wheat trading strategies. Grain Markets Corn Wheat Soybeans Price direction for commodities; grain marketing plans strategies using futures & option to get highest price grain.

Wheat trading strategies

Grain Marketing Strategies: What is a Hedge?

Wheat trading strategies. The grain markets are affected by several factors. Knowing what matters is key.

Wheat trading strategies


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Lean hog futures are one of the cattle futures contracts available for trading from the CME Group futures exchange. Lean hog futures make for a critic Trading the corn futures markets has its appeal for traders interested in the grains market.

Corn futures are no different from other grains such as w The study of the behavior of gold during periods of recessions has been one of the most favorite studies, especially for gold bugs. As the economy slo Copper futures are one of the few financial derivatives that track an underlying asset that actually has practical use in the real world. Natural gas is a flammable gas comprising of methane and other hydrocarbons.

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Gold finds its uses from industrial a Crude Oil, as an energy asset is one of the most popular futures contract for traders. It is one of the most volatile of energy futures contract and i Wheat is a grain that that is cultivated and consumed worldwide, making it one of the staple foods in the world that spans across continents and generations.

Wheat is a primary ingredient in bread and dough, making it one of the most widely consumed food across the globe. Grains trade , as wheat is commonly referred to have been of interest for speculators as well as merchants and producers and for a reason.

Wheat futures are part of the agriculture or grains complex and offers some unique trading opportunities for futures traders. It also has over a century of history as one of the oldest commodities in futures trading.

What is unique about the wheat market is that it is global and not concentrated to one particular region. Although the United States is the largest wheat producer while Japan the biggest wheat importer, other wheat exporting nations includes parts of Europe and Argentina. Wheat futures are part of the original three agricultural futures oats and corn being the other two that started to trade around , nearly 30 years after the Chicago Board of Trade CBOT was launched.

These three grains products were the first commodities that were traded and helped to revolutionize the futures trading industry. When wheat futures started being traded on the Chicago Board of Trade CBOT in , it was estimated that average wheat trading volume was around 2. As of , wheat futures recorded a volume of 31 million contracts indicating that demand for the commodity has only grown in leaps and bounds.

Wheat futures were exposed to a wider market, when in , electronic trading was introduced for the grains markets. With the commodity boom underway, the electronic trading enabled to bring in a lot more market participants to the agriculture complex.

Having an understanding of the basics of wheat futures and knowing a bit of history, traders who want to trade the wheat futures, need to remember these seven points. Although the term " wheat futures " are widely used, there are actually different types of wheat with different characteristics.

Some of the most common wheat types include the hard red winter wheat, the soft red winter wheat and hard red spring wheat futures. Each of these three wheat types is cultivated in different parts of the United States. Hard red winter wheat is mostly produced in the state of Kansas and grows across the plains of Texas and South Dakota.

Whereas, the soft red winter wheat is growth is produced in the eastern Corn Belt spanning across Missouri to Michigan. The hard red spring wheat or HRS wheat is traded at the Minneapolis grain exchange. Each of the wheat grades are used for different purposes, most of them milled into flour for different uses. The wheat futures can be traded as a standard size or a mini-sized contract. Mini-sized and Standard wheat futures contract. The SRW wheat is traded in a standardized contract of bushels, while a mini-contract is standardized to bushels.

The futures contracts are be settled for delivery with the last trading day being the 15 th business calendar day of the contract month. Retail day traders will of course be forced to close out their positions on or before the last trading day. The wheat futures are settled for delivery. The crop market year for the agricultural products plays an important role.

Therefore, traders should know beforehand on the technicalities such as which operative marketing year of the crop is being traded. This data is usually released by the U. The marketing years are important part of the fundamental analysis for the grains markets including wheat and offers glimpse in supply and demand. Wheat futures traders continuously monitor the changes to the domestic production, demand and exports in a bid to understand what the "ending stocks" for the wheat futures may look like by August 31 st.

Also remember that wheat crops can be spring or winter crops. When the time draws closer to the old crop marketing year, traders already start to focus on the new crop production data and build expectations from the USDA reports, which drives the prices. Wheat traders should therefore focus on the contract month that they are trading and the reports, which should also take into account the crop marketing year.

For example, it is common to hear about forecasts for wheat prices, but these are not blanket prices. In many cases, the price forecasts for wheat are based on the marketing year. Besides the crop marketing years, the supply and demand aspects play a major role as well in influencing the prices of wheat. This is seen as one of the reasons for lower wheat prices as supply continues to outstrip demand.

Thus the above two elements play a role in determining the trends in the wheat futures markets, which is important for the wheat futures trader. Therefore, the global supply and demand can play a crucial role. Combining this with the aspect of the marketing year and can help the wheat futures trader to choose the appropriate contract month to trade, the prevailing trends, thus giving a complete picture that accounts for both the fundamental and technical aspects.

As a commodity for the global markets, wheat prices are heavily influenced by the global economy. This is because there are larger factors in play such as the oil markets which can hit the supply and demand dynamics.

A slower economy also translates to lower investments in the agricultural sector as well as financing needed for the farmers, which lead to smaller and expensive yields. Overall, a slowdown in the economy can often result in a slump in wheat prices. The lower output on the production side could potentially lead to higher prices in Wheat, especially when one looks at the wheat futures from the aspects of the contract month that is being traded and the crop marketing year.

A common but an important aspect that affects all agricultural futures, including wheat is the weather factor which can play a big role in the crop production. The aspects of weather are especially critical during the crop plantation period which can eventually impact the output. As an example, in June , Wheat futures prices jumped to a 6-month high sparked by increase in demand on account of the bad weather in some of the growing regions. Heavy rains, drought, extreme heat and hurricanes can all wreck havoc on the wheat crop and are often bullish for Wheat futures prices.

Wheat futures traders should pay attention to the weather patterns such as Eli-Nino that can have significant impact on the crop, especially in the northern hemisphere. Weather can have distinct effects on wheat crop depending on whether the crop is spring or winter wheat. Spring wheat and winter wheat are two main crops. The spring wheat is planted around April in the U.

Thus, they do not go through a dormant stage. Winter wheat is planted around September and planting continues through October in the southern parts of the U. Unlike spring wheat, the winter wheat crops sprout and go through the dormant phase until the winter freeze is over. The winter wheat crops mature and is ready for harvest by June - July.

Market reports for the agricultural complex for the futures market is an essential part for traders and speculators in determining the prices based on the fundamental reports. The United States Department of Agriculture's market report on the wheat industry is one such report that is considered to be a major market moving report. This report, also known as the USDA report offers timely insights into the wheat market. In essence, it connects the information such as crops, plantation and the demand outlook therefore bringing the complete picture for the agriculture market.


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