Cash Market Moves

CME Group has announced it will launch a suite of micro grain and oilseed futures contracts on Feb. 24, 2025, pending regulatory review, according to a news release from Jan. 3. These contracts will be cash-settled and one-tenth the size of the company's legacy corn, wheat, soybean, soybean oil and soybean meal futures.

"Our benchmark grain and oilseed futures products are the most liquid and highly utilized markets in global agriculture today," said John Ricci, managing director and global head of agriculture at CME Group. "These smaller-sized contracts will provide additional flexibility for market participants to manage their agricultural portfolios with greater precision."

The new micro contracts trade at 1/10 the size of the standard contracts, allowing you to scale up or down with precision. As an example, a standard (also known as legacy) corn contract is 5,000 bushels. The micro contract will be 500 bushels. In comparison, mini futures are 1/5 the size and are 1,000 bushels.

CME noted the micro futures allow someone to trade the agricultural markets without the hassle and cost of managing the physical product.

"Micro futures have most of the same specs as mini and legacy contracts, with a major difference in size and settlement. All three classes of futures share the same expiration months and trading times, with minis having a contract size 1/5 of standard legacy contract and micros having a contract size of 1/10 of standard futures," noted CME.

"Micro contracts are financially settled, which provide several benefits, including the ability to participate in the expiration of a contract without the consideration of any aspects of physical delivery. Cash settlement allows a greater number of entities to participate late into a contract's life. That means traders have more flexibility in their strategies near contract expiration. Since micros are financially settled, they are not fungible with physically delivered standard-sized contracts."

I asked Garrett J. Toay of AgTraderTalk for his thoughts about the new micro futures contracts. "Mini contracts still exist, but I think the exchange is trying to attract nontraditional traders -- the Robinhood type traders," Toay responded. "In the past, mini contracts were a good way for beginning traders to learn to trade without the risk of the size of a normal-sized contract. Liquidity was always an issue. The 500-bushel contracts probably only help new or beginning producers for hedging purposes in my opinion (IMO). It might be a niche market for the reddit traders of the world who want to have some exposure to commodities."

Toay added, "Robinhood markets are a trading platform that allows you to trade in micro-sized contracts. It's meant to give the small-time traders access to markets. Hence the name Robinhood. Popular with the crypto crowd."

Below is a handy fact sheet about the micro contracts from the CME. If you have any other questions that are not answered on the fact sheet, you can call the CME for further clarification. The phone number and email are provided at the end of the press release.

Link to CME press release: https://www.cmegroup.com/…

Specs for new micro contracts: https://www.cmegroup.com/…

CME FAQ: Micro Agricultural futures: https://www.cmegroup.com/…

Mary Kennedy can be reached at Mary.Kennedy@dtn.com

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