Wheat Futures Trading
Wheat futures trading enables speculators of all sizes to speculate on the price movements of wheat.
Wheat is a grain that is commonly used in our own diets. Many foods we eat today are derived from wheat including pasta, noodles, biscuits, bread and many more.
Consequently, wheat prices can greatly affect the price of many goods we buy when we goto the supermarket.
Wheat Chart
In recent years the price of wheat has grown substantially. As we can from the chart above, price was around 300 cents a bushel. At the beginning of 2007 price was around the 800 mark. Today, it trades even higher. This volatility can present some excellent trading opportunities.
CBOT wheat futures are the most commonly traded contract. The standard contract is for 5,000 bushels. One bushel is equivalent to 35.24 liters. Bushels are priced in cents. So if the price of a contract was currently 850, it would be $8.50 a bushel. The nominal value in this instance would be $42,500. This would be the $8.50 per bushel multiplied by 5,000.
The margin requirements for this wheat contract are currently $1,708 for the initial and $1,265 for maintenance. There are also mini contracts traded on the CBOT exchange. These contracts are for 1,000 bushels.
In conclusion, if you want to trade wheat futures, there is the potential to make some excellent returns, especially when we consider that price has nearly tripled in recent years. However, when we put margin into the equation, investing in wheat certainly isn't for the faint hearted!
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