Wheat Trading your best guide

 

 

Wheat Trading is the highest volume grain and agricultural market traded on the CME Group exchange. Wheat trades on three different exchanges in the US alone.

 

Wheat Trading Price

Like many of the other grains Wheat trades in 5000 bushel units for each futures contract. A bushel of wheat weighs approximately 60 pounds. A wheat futures contract controls 5000 bushels of wheat. Wheat has been trading in a range of $7.57 - $10.80 a bushel over the past year 2011. Going back three years the range is $5.00 - $10.80 per bushel. Every cent the price of wheat moves is a $50 move in value. A full $1.00 move in the wheat market would equate to a $5000 move in the futures contract (5000 bushels X $1.00 move = $5000). A $2 move in the wheat market has a value of $10,000 and would be considered a move of huge proportions.

Wheat is traded with a futures contract to speculate on whether the price is to go up or down. If you think wheat will increase in value you would want to go long a futures contract. This would be the case if you predicted that the amount of wheat production was going to be lower due to lower crop yields from floods, fires or droughts. If demand for the wheat is high then the price of wheat should go higher.

 

Wheat Trading Types

Wheat has a few different varieties that are traded in the US. You have Soft Red Winter "SRW" traded on CME Group, Hard Red Winter "HRW" traded on Kansas City Board of Trade and Hard Red Spring "HRS" traded on Minneapolis Grain Exchange. Protein content is what separates the majority of the wheats. HRW needs an 11% protein content and Hard Red Spring Wheat a huge 13.5% protein content for delivery without penalty.

 

Wheat Trading Delivery Grades

Wheat has different delivery grades that may command a premium. #2 Wheat is typically delivered at the contract price, #1 will get a premium of 3 cents for Soft Red Winter on CME Group and 1 1/2 cents on KCBT for HRW. Wheat grades come down to the protein content. Bagels and high end breads will use Hard Red Spring Wheat which has a 13.5% or better protein content.

 

 

Wheat Trading History

Wheat has been a staple food and basic use commodity for thousands of years. Hard Red Spring Wheat has traded on the Minneapolis Grain Exchange since 1881. Uses for wheat include; breads, biscuits, cereals, pastas and even beer and bio fuels.

 

Wheat Trading Basics

You want to choose whether to go long or short. Look for a long entry if you think the price will appreciate. If you expect wheat to go lower you will want to time your short entry.

One way individual investors and professional traders will use to determine whether to go long or short the wheat is to use a trading system. Many traders use TradeThink our proprietary trading algorithm to help show the current trend direction of the wheat market.

 

 

Wheat Trading Systems

Most individual traders will trade wheat with a single futures contract. If you are a larger trader you could simply trade more contracts or use multiple strategies to leg into many wheat trades. Our Legacy X Pro strategy uses three different time frames to track the wheat market. This way you can be long or short up to three wheat contracts during a nice trend. If you want to trade even more wheat contracts you can do that with some of our other trading systems.

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