What are Agricultural Futures? A Beginner’s Guide

Agricultural futures are some of the oldest and most actively traded contracts in the commodities market. They let traders, farmers, and businesses lock in prices or speculate on the future value of essential goods like corn, wheat, soybeans, cattle, and hogs.

In this beginner’s guide, we’ll walk through:

• What agricultural futures are and how they work

• Who uses ag futures and why

• Popular grain and livestock contracts

• Key benefits and risks

• How to start trading ag futures on MetroTrade

What Are Agricultural Futures?

Agricultural futures are standardized contracts that allow you to buy or sell a specific amount of an agricultural commodity at a set price on a future date. These contracts trade on regulated exchanges like the CME and cover everything from crops to livestock.

You’re not physically taking delivery of corn or cattle. Instead, you’re trading the price movement of those commodities, much like futures for oil, metals, or indexes.

Key takeaway: Ag futures let you speculate on, or hedge against, price changes in the food and agriculture markets, with no need to handle the actual goods.

How Do Agricultural Futures Work?

Let’s say corn is currently trading at $5.00 per bushel. You believe prices will rise, so you buy a Corn Futures contract.

• If corn rises to $5.50 per bushel by expiration, you profit.

• If it drops to $4.50, you lose money.

Each contract has:

• A contract size: (e.g., 5,000 bushels of corn)

• A minimum tick size: (the smallest price move)

• A tick value: (how much each move is worth)

• An expiration date

• A margin requirement (how much you need to trade)

Who Uses Agricultural Futures?

Speculators

Traders looking to profit from price moves in grains or livestock. They might go long if they expect a drought to impact supply or go short if they anticipate a bumper crop.

Farmers and Producers

Hedge future selling prices to protect against falling market prices. For example, a soybean farmer might sell Soybean Futures today to lock in revenue before harvest.

Food Companies and Processors

Buy futures to secure raw ingredient costs. A cereal company might buy Corn or Wheat Futures to manage price volatility and reduce risk.

Livestock Operators

Use futures to hedge feed costs (via grain futures) or the sale price of live cattle and hogs.

Popular U.S. Agricultural Futures Contracts

Here’s a breakdown of commonly traded ag futures available on MetroTrade:

Note: Grains trade Sunday–Friday (7 PM–7:45 AM & 8:30 AM–1:20 PM CST). Livestock trades Mon–Fri (8:30 AM–1:05 PM CST).

Examples of Agricultural Futures

Corn Futures (/ZC)

• Contract size: 5,000 bushels
• Tick size: 0.25¢/bushel = $12.50
• Use case: Speculate on harvest reports, droughts, or export demand
• E-mini version: /XC (1,000 bushels)

Wheat Futures (/ZW)

• Contract size: 5,000 bushels
• Tick size: 0.25¢/bushel = $12.50
• Use case: Hedge exposure to soft red winter wheat, common in flour production
• E-mini version: /XW (1,000 bushels)

Soybean Futures (/ZS)

• Contract size: 5,000 bushels
• Tick size: 0.25¢/bushel = $12.50
• Use case: Trade on export trends, biofuel policy, or planting forecasts
• E-mini version: /XK (1,000 bushels)

Soybean Oil Futures (/ZL)

• Contract size: 60,000 pounds
• Tick size: $0.0001/lb = $6.00
• Use case: Hedge biofuel ingredients or global vegetable oil markets

Soybean Meal Futures (/ZM)

• Contract size: 100 short tons
• Tick size: $0.10/ton = $10.00
• Use case: Used in animal feed; prices move on livestock demand and soybean crush margins

Live Cattle Futures (/LE)

• Contract size: 40,000 pounds
• Tick size: $0.025/lb = $10.00
• Use case: Hedge or speculate on beef supply, feed costs, and seasonal demand

Lean Hog Futures (/HE)

• Contract size: 40,000 pounds
• Tick size: $0.025/lb = $10.00
• Use case: Manage price risk tied to pork production, disease outbreaks, or export markets

Key Benefits of Agricultural Futures

Global Market Exposure: Trade some of the world’s most essential food and feed commodities.

Built-in Leverage: Futures allow you to control large positions with relatively small capital outlays — though this also increases risk.

Diversification: Ag markets don’t always move with stocks or interest rates. They can offer unique opportunities during inflation or economic volatility.

Real-Time Hedging: Farmers, food producers, and buyers use these contracts to lock in prices and reduce uncertainty.

Liquidity: Major contracts like corn, soybeans, and cattle trade with high volume and tight spreads.

Risks of Agricultural Futures

Leverage Risk: While leverage boosts gains, it also magnifies losses. A small price move in grains or livestock can lead to large dollar swings.

Weather Volatility: Markets often react sharply to droughts, storms, or unexpected climate events that impact crops or animal supply.

Government and Policy Risk: Trade policies, subsidies, or global tariffs can quickly change demand and pricing dynamics.

Expiration and Roll Risk: All futures contracts expire. You’ll need to roll your position if you want to maintain exposure long-term.

Complexity for Beginners: Each contract has different units (bushels, pounds, tons), tick values, and seasonality. Take time to learn before trading.

How to Start Trading Agricultural Futures

1. Open a MetroTrade account
   There’s no minimum deposit required to start trading futures.

2. Pick your contract
   Start with a liquid, well-known contract like /ZC (Corn) or /ZS (Soybeans).

3. Learn the specs
   Understand contract size, tick value, trading hours, and expiration.

4. Use a demo account
   Test strategies risk-free before putting money on the line.

5. Trade with a plan
   Set your risk limits, use stop orders, and stay up to date on market news.

Final Thoughts

Agricultural futures offer traders and businesses a powerful way to manage price risk or take advantage of market trends in essential commodities. Whether you’re hedging a crop, reacting to USDA reports, or speculating on food inflation, these contracts give you direct access to the world’s most fundamental goods.

Start small, learn the mechanics, and build your strategy over time.

Ready to trade agricultural futures?
Explore Contracts on MetroTrade

Or practice with a Demo Trading Account

Frequently Asked Questions