We’ve had questions about how to find commodity prices, specifically grain. How many times have you seen commodity charts with running tapes of numbers or spreadsheets listing hundreds of numbers? It can be intimidating at first.
A futures contract is a financial contract obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price. It was standardized to determine the price at which the commodity is worth according to the buyers and sellers.
It’s easy to find futures quotes online. Free sites like www.cmegroup.com are helpful sources. Search for the commodity, like corn, you want to value. For now, we won’t get into reading a chart, but only the market data.
The page will show multiple numbers including trading month and price fluctuation. Here is a breakdown:
Month and year. Sometimes you will see a month code instead of the written month. Months from January through December will show F, G, H, J, K, M, N, Q, U, V, X, Z. F being January, G February, H March and so on. Not all commodities are traded on each of the 12 months. The nearest month and the harvest month are typically the best months to watch for if you are looking for a quick reading on the market’s value.
Last. This is the latest value according to what buyers are willing to pay and sellers are willing to sell. It may change frequently when the market is open. This is the number most commonly watched.
Change. The change indicates how much the price has moved from the prior day’s close.
Prior settle. This the last quote after closing in the previous trading period.
Open. Open price is the price in which the commodity started at opening time.
High. This is the highest the commodity has traded in the trading period.
Low. This is the lowest the commodity has traded in the trading period.
Volume. The number of trades involved. Some commodities have more significantly more volume than others.
High/low limit. This is the maximum range in which a commodity can change in the open market period. This limit is in place to limit volatility on a given trading period.
Remember, the futures portion of the price is not the actual price in which a local grain buyer is willing to pay. The deviation of the cash bid from futures is the basis. It can be positive or negative. Most grain elevators have websites posting cash prices, which include the combined futures price and basis to get the actual value at that moment or a later delivery period. My area for example, is posting a negative 25 cent basis on corn delivered today, so $3.88 minus $0.25 = $3.63.
Advanced traders watch these numbers in depth, but individuals at any interest level can read current prices this way.
Past results are not necessarily indicative of future results. There is a risk of loss as well as profits when trading futures and options.
Email Katie at khancock@brockreport.com
Free trial of the Brock Report
