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hedge project - updates
Mini-sized grain futures Thursday 9/24/2020 12:07:00 AM GMT+03:00

Tomorrow I am getting a closer look into mini-sized grain futures. It was introduced by CBOT in 2007 and since then it gained a lot of traction increasing volumes and interest. Ag minis mirror their respective contracts - corn, wheat and soybeans; however there are a few nuances to point out.

The main is the margin requirement. This could be the main drive force which could drag you into grain minis. The mini-sized contracts are 1/5th the size of the standard one; which means while there are 5,000 bushels of corn or wheat in standard contract, as to trade a mini one, there is only 1,000 bu per contract. Thus there is less equity needed to open or to hold a position. This makes the minis attractive to test trades or to hold positions over night which could be too risky with real size ags.

If a tick move in standard grains is $12.50, in mini grains it would be $1.25.

On the contrary the volumes in mini-sized grains is dramatically less than in normal ones and it could only appeal to those who like very slow paced markets. The most unpleasant thing is the spread, which for standard grains is as less as one tick, seldom two, but in minis it could be up to 3 to ticks which makes mini-sized grains quite hard or almost impossible to day trade but could be good for swing trades.

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