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Wheat’s the Difference?

April 20, 2012 by Don DeBartolo| Futures 101

When talking about Wheat futures, it is important to understand that there are three distinct contracts. Not only are the three contracts based on different Wheat products, but each trade at three different exchanges. It’s important to be aware of the contract differences as the price patterns may also differ.

Chicago Wheat Futures Contract

Let’s start with the first exchange formed in the US: the Chicago Board of Trade (CBOT). At the CBOT, now known as the CME Group, the Chicago Wheat futures contract is traded; this is the most actively traded contract of the three. On April 17, 2012, the July 2012 Chicago Wheat contract traded 38,830 times. This contract is also known as Soft Red Winter Wheat. Its name is derived from the fact that the crop is growing during the US winter months. Soft Red Winter Wheat is grown in the South, the Great Lakes region and east to the Atlantic, all of which are more humid environments than other wheat producing regions. The planting season is from mid-August through the end of October. The crop heads in May, and the harvest occurs at the end of May through August. Soft Red Winter Wheat is used to produce flour, the key ingredient for breads, pasta, crackers and many other food products, as well as several industrial products such as starches and adhesives.

Kansis City (KC) Wheat Contract

At the Kansas City Board of Trade, the KC Wheat futures contract is traded. On April 17, 2012, the July KC Wheat contract traded 9,042 times. This contract is known as Hard Red Winter Wheat which also grows during the US winter months. Hard Red Winter Wheat is the most abundant crop in the US, growing in Nebraska, Kansas, Oklahoma and the Texas panhandle. These regions are ideal for planting due to the cold, subzero winters and general lack of precipitation. The planting season is from mid-August through the end of October. The crop heads in May and the harvest occurs at the end of May through August. Hard Red Winter Wheat’s primary use is in bread making.

Hard Red Spring Wheat Futures Contract

Up north, you will find the Minneapolis Grain Exchange where the Minneapolis Wheat contract is traded. On April 17, the July 2012 Minneapolis Wheat contract traded 2,512 times. This contract is also known as Hard Red Spring Wheat. Its name is derived from the fact that the crop is planted in the US spring months. Hard Red Spring Wheat is grown in North and South Dakota, Montana, Wyoming, and Idaho. The winters in the Northern Plains are too severe for winter production. The rich black soil and the dry, hot summers make this region ideal for this crop. The planting season is from April through the end of May. The crop heads in mid-June to July and the harvest occurs mid-July through mid-October. The Hard Red Spring Wheat contract has a higher protein level suitable for milling and is used primarily in breads.

So when talking about Wheat contracts, keep in mind that each contract is referred to by the city in which it is traded. Winter wheat (Chicago and Kansas City) is planted in the winter. Spring wheat (Minneapolis) is planted in the spring. Since the price of the futures contract is heavily based on crop size and weather factors, it is important to know the yearly planting and harvesting schedules of each wheat product.

There is a chart formation setup and potential trade recommendation if a breakout occurs in the July 2012 Chicago Wheat market. For this trade recommendation and future trade recommendations, register for the GBE Trade Spotlight advisory service.

July 2012 Chicago Wheat

Daniels Trading Market Spotlight

Filed Under: Futures 101, Trade Spotlight

About Don DeBartolo

Don C. DeBartolo is a Series 3 licensed broker registered with the National Futures Association (NFA). As a former arbitrage clerk in the S&P 500 futures pit at the Chicago Mercantile Exchange (CME), Don has floor trading experience. Taking his trade execution expertise and ability to navigate a fast-paced environment, Don transitioned to the brokerage side of the business. Since 2005, he has worked at Daniels Trading, a brokerage firm in the heart of the financial district in Chicago. His responsibilities as a broker include providing market analysis, trade execution, and money management to his clients around the world. In March 2010, he developed a formal trade advisory for clients of the firm seeking specific trade recommendations and subsequent risk management.

Due to his widespread proficiency and experience with the futures and commodity options markets, he is able to offer his clients timely insight, specialized trade recommendations, and educational information through various videos and writings.

Studying at Loyola University Chicago, Don discovered the international sport of rugby. Still today, he plays for the Chicago Griffins, a member of the highest league of rugby competition in the United States. Skill and discipline are two traits that carry over from the pitch to the trading screens.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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