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Wheat Trading
Wheat Trading Defined and ExplainedWheat is a grass that is cultivated worldwide. The global grain trade has always been of interest to investors because wheat represents one of the single most important components of world food consumption. Wheat is one of the world’s key staple products, with about 10 percent of production traded on world markets each year.
Wheat Market InvestingInvesting in wheat allows traders to participate in the agricultural markets without holding a physical market position. Investing in wheat also provides growers with a risk management tool to protect the price of their expected purchase or sale of physical grain. The United States is one of the world's largest wheat producing countries. Japan is one of the largest importers of wheat in the world, with imports originating from Australia, Canada, and the United States. Exportable wheat supplies are also available from Argentina, Europe, Ukraine and other areas of the world, depending on crop situations. This makes wheat a truly global market and allows traders to enter into a global environment to create a broad trading strategy using wheat alone or in combination with other grains. Wheat Classes and TradingWheat comes in several classes, which are used for special purposes. Hard red winter wheat is by far the largest class. Kansas is the largest producing state so weather there is a key factor that wheat traders need to monitor, but hard red winter wheat is grown in the Plains from Texas to South Dakota. This type of wheat is milled into flour used for breads. Hard red winter wheat futures are traded at the Kansas City Board of Trade.
Soft red winter wheat is grown primarily in the eastern Corn Belt from Missouri to Michigan and is milled mainly for flour used in crackers, biscuits and cookies. Soft red winter wheat futures and options are traded at the Chicago Board of Trade.
Hard red spring wheat is grown primarily in the Dakotas and Minnesota, with North Dakota the largest producing state. This type of wheat is milled into flour used in breads, bagels and hard-baked goods. Hard red spring wheat futures are traded at the Minneapolis Grain Exchange.
All three of these classes of wheat futures are now traded electronically on the CME Group’s Globex trading platform.
Several other classes of wheat are not traded as futures – white wheat grown mainly in the Pacific Northwest and durum wheat used in pastas in the same areas as spring wheat.
Wheat Prices / RatesThe main wheat futures contract at all three exchanges where wheat is traded is for 5,000 bushels of the specified wheat although CME Group’s Chicago Board of Trade also trades a mini wheat futures contract of 1,000 bushels. The minimum price fluctuation is 1/4 cent per bushel, indicating a change in value of $12.50 for the 5,000-bushel contract. Wheat contracts are traded on July, September, December, March, and May calendar months.
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* VantagePoint's accuracy statistics were computed on out-of-sample price data utilizing neural networks trained on both single market and intermarket data and relate to the Neural Index which indicates whether the average of tomorrow’s typical price and the typical price of the day after tomorrow (both unknowns at this time) are expected to be higher or lower than the average of yesterday's typical price and the typical price of the day before yesterday. The numerical value of the Neural Index, either a one (1) or a zero (0) thereby indicates whether or not the trend direction is expected to be higher or lower for each target market over the next two days. A Neural Network accuracy statistic of 80% does not mean that eight out of ten trades will be winning trades. VantagePoint is not a trading system that gives the same specific buy and sell signals to all users. It is a technical forecasting tool that is comprised of proprietary forecasting indicators that apply neural networks to market data for the purpose of finding patterns and relationships between markets and then using this information to make futuristic forecasts. Using these indicators each trader determines his or her own entries, exits and stop placements which may vary from those of other traders due to differences among traders in trading style, objectives, risk propensity, account size and number of contracts involved, thereby producing different trading results from one trader to another. Futures and options trading involves risk, is not for every trader, and only risk capital should be used. For more detailed information, please read our Important Disclaimer, Privacy Policy, and Software License Agreement. |
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