If it had not been for wheat, human beings may never have socially and culturally developed as cosmopolitan as we have. Wheat was the first crop to be cultivated on a grand scale and stored long-term, enabling the start of city-based societies and the dawning of civilization. When wheat is traded on the commodities markets, it must be classified into very specific classes according to grain properties. As a result, farmers usually try to predict which class of wheat will be the most successful in the futures markets.
| Wheat Futures Contract Specifications | |
| Contract Size | 5,000 bushels (~ 136 Metric Tons) |
| Price Quotation | Cents per bushel |
| Grade And Quality | #2 Soft Red Winter at contract price, #1 Soft Red Winter at a 3 cent premium, other deliverable grades listed in Rule 14104. |
| Trading Hours | Sunday – Friday 7:00 p.m. – 7:45 a.m. CT and |
| Monday – Friday 8:30 a.m. – 1:20 p.m. CT | |
| Minimum Price Fluctuation | 1/4 of one cent per bushel ($12.50 per contract) |
| Product Code | CME Globex: ZW |
| CME ClearPort: W | |
| Clearing: W | |
| TAS: ZWT | |
| Listed Contracts | March (H), May (K), July (N), September (U) & December (Z) |
| Settlement Method | Deliverable |
| Last Trade Date | The business day prior to the 15th calendar day of the contract month. |
| Last Delivery Date | Second business day following the last trading day of the delivery month. |
| Trade At Marker Or Trade At Settlement Rules | Trading at settlement is available for first 3 listed futures contracts, nearby new-crop July contract (if not part of the first 3 outrights), first to second month calendar spread, second to third month calendar spread, and nearest Jul-Dec OR Dec-Jul spread when available (when December is listed); and are subject to the existing TAS rules. The Last Trade Date for CBOT Grain and Oilseed TAS products will be the First Position Day (FPD) of the front-month contract (FPD is the second to last business day in the month prior to the nearby contract month).
Trading in all CBOT Grain TAS products will be 19:00-07:45 and 08:30-13:15 Chicago time. All resting TAS orders at 07:45 will remain in the book for the 08:30 opening, unless cancelled. TAS products will trade a total of four ticks above and below the settlement price in ticks of the corresponding futures contract (0.0025), off of a “Base Price” of 0 to create a differential (plus or minus 4 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a “traditional” TAS trade which will clear exactly at the final settlement price of the day. |
| Settlement Procedures | Wheat Futures Settlement Procedures |
| Exchange Rules | These contracts are listed with, and subject to, the rules and regulations of CBOT. |
| Source: CME Group | |
Wheat Facts
According to the U.S. Department of Agriculture (USDA), wheat ranks third among U.S. field crops, behind corn and soybeans. Although U.S. wheat planted area has trended down over the years, the U.S. remains to be a major wheat producer. Nearly half of the U.S. wheat crop is exported as the world wheat consumption is continuing to expand due to rising population and incomes.
There are five major classes of wheat grown in the U.S. Each crop is slightly different from the other, growing in seperate regions and used for various purposes. Hard red winter wheat is the number one export in the United States.
Hard Red Winter Wheat (HRW)
- The largest of the US wheat crops
- Grown in Great Plains Regions
- Primarily used for bread making, can be used as a substitute for livestock feed
Hard Red Spring Wheat (HRS)
- The largest of the US wheat crops
- Grown in Northern Plains Regions
- Valued for high protein levels, can be used for specialty breads
Soft Red Winter Wheat (SRW)
- The first modern futures contract was for Soft Red Winter Wheat
- Grown east of the Mississippi River in more humid environments
- Suitable for milling
- Processed into flour, mainly used for cakes and flour based snacks
White Wheat
- Grown in Washington, Oregon, Idaho, Michigan, and New York
- Primarily used as flour for noodle products, crackers, cereals and white crusted breads
Durum Wheat
- Grown primarily in North Dakota and Montana
- Used in the production of pasta
Key Terms
Protein Content: Protein is the major compound in wheat. Protein content is a key specification to determine the usage for the particular wheat. Low protein content is used to make snacks or cakes while high protein content is necessary for breadmaking.
Yield: Also referred to as “agricultural output”, crop yield is the measurement of the amount of crop that was harvested per unit of land area.
Last updated October 2015
Additional Info
Recent Posts on Wheat
- May 29 – How I Traded the Gap in Wheat (5/29/2019)- In this morning’s comments for Swing Trader’s Insight, one of my comments was to sell the July Wheat futures if they fell back below the Tuesday high. A sharp morning selloff gave a good trade opportunity. Following a bullish USDA report yesterday afternoon, the grain markets traded sharply higher last night. For the July Wheat… Read more.
- Beyond the Spotlight: Heating Oil, Wheat, & Cotton – February 4, 2019 (2/4/2019)- Beyond the Spotlight for the week of February 04, 2019 covers the Heating Oil, Chicago Wheat, and Cotton markets. Watch now to look ahead with us, while potentially creating additional trading opportunities for yourself.
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