When choosing the proper futures contract, all options should be weighed. There are two different commodities wheat futures contracts traded on Chicago markets: the full sized wheat contract and the mini sized wheat contract. It’s important to understand the differences between the two contracts so you can trade the commodity wheat futures contract that best suits your needs. Before we identify the differences, let’s look at the core similarities.
Both contracts are traded on the Chicago Board of Trade (CBOT) under the Chicago Mercantile (CME) Group, Inc. name. Each of the contracts also has soft red winter wheat as the underlying commodity of their futures. This is not to be confused with the hard red winter wheat and hard red spring wheat contracts traded on the Kansas City Board of Trade and Minneapolis Grain Exchange. Beyond having the commodity and the exchange in common, the mini and full sized commodities wheat futures contracts also have the same delivery months available for trading.
The contract 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 |
The main differences in the futures contracts are derived from the discrepancy in contract size. As you can see, the mini contract size is 1/5 that of the full sized futures contract. This is an important concept to consider when trading commodity wheat markets. Smaller margin value means you have the ability to start your trading career with less capital. For many, this can be the difference between trading wheat or not. The reduced contract size also means that tick values are smaller. Smaller tick values mean price movements will have less of an effect on your principal. This may allow you to stay in the game longer despite early trading mistakes; and that’s the key. The longer you trade commodity wheat markets, the better chance you have to learn the necessary skill set to achieve possible success in this industry.
Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
