Investing in Corn Futures
Investing in corn futures provides the opportunity for some fantastic returns on your money. The volatility of this instrument in recent years has been very high.
corn chart
However, remember while margin can significantly increase your profits, it can also significantly increase your losses and result in margin calls from your broker. This is very important to fully understand if you wish to trade corn futures.
Corn has many uses in modern life. In many parts of the world it is used is to feed livestock, forage and silage. Corn is also eaten by humans, infact it is part of a staple diet in some regions of the world.
CBOT corn contracts are the most commonly traded contracts. A standard contract is for 5,000 bushels. I had never heard of a "bushel" when I first learnt about corn. A bushel is 35.24 liters.
The price of a corn contract is quoted in cents per bushel. So if the quote for a contract is "450", this would be $4.50 per bushel.
Using the same example, if the price of a contract was 450, the nominal value of a standard contract would be $22,500. This is the $4.50 multiplied by the 5,000.
The margin requirement for this contract is currently $1,080 and maintenance margin is currently $800. However, due to the very high volatility of this instrument, I would recommend having an account balance of at least 25% of the nominal value of the contract you are trading, preferably more.
Return from Investing in Corn Futures to Grain Futures