Corn has been called the other yellow gold because of its value around the globe throughout most of the history of man. For centuries corn has been a staple of everyday life, serving as a source of food, energy and currency. Early Indians migrated from Eastern Asia through North America to what is now South America and used corn plants for everything from making clothes to making a primitive beer from its chewed kernels. For thousands of years, maize crops have been cultivated by the Mayans and Incas to today's advanced hybrids resistant to pests and chemicals, corn remains firmly rooted at the heart of agriculture. Corn is thought to be the second most cultivated plant throughout the history of man behind wheat.

As an exchange traded commodity and future contract, corn is one of the two originals and is also the most liquid of the grain future contracts. Cotton began trading in New York at about the same time that corn futures began trading in Chicago in the mid 1800's. The original corn futures or forward contract was for 3000 bushels instead of the 5000 bushel contract of today. Back then the exchange membership fees were $3 instead of the 6 and 7 figure costs for exchange seats today. The Chicago Board of Trade is the premiere corn future trading exchange in the world today.

Corn's role in the production of ethanol has increased its demand because of the high prices for petroleum products. Many experts agree that if crude oil prices stay above $45/barrel it is economically feasible for ethanol to be produced and added to unleaded gasoline as an environmentally friendly alternative to MTBE which has been found to be poisonous to groundwater supplies. A blend of up to 85% ethanol mixed with 15% unleaded gasoline (E85) has been found to be the right amount to keep pollution levels down and still keep automobiles running efficiently. Corn-based ethanol is renewable, biodegrades easily and can help the United States be less dependent upon foreign oil. As of 2005, Brazil has 188 million people, the world's 14th largest economy and it has managed to use ethanol for 40% of the country's fuel usage. In Brazil, the price of ethanol is roughly half that of gasoline. The US currently uses ethanol for 3% of it's fuel usage.

Corn has many different uses and many different products are made from corn that many people are unaware of: antibiotics, aspirin, laminated building products, lubricating agents, metal plating, adhesives, construction materials and even cardboard. These diverse applications for corn make the corn futures and corn options market that much more important to the corn industry. Many savvy farmers use the corn futures and corn options markets to hedge their crops against adverse price movements.

Producing a Crop That Feeds and Fuels the World

How many times a day does the average American consumer use a product derived from corn? You may fill your car up with ethanol blended fuel. That soda at lunch - sweetened with a corn sweetener. Maybe you have a pillow or comforter made from corn fiber. And the pot roasts for dinner - most likely corn-fed beef. The grain future contracts have become more and more popular because of their relative liquidity and leverage.

In the United States, 57 percent of the crop is fed to animals, helping livestock producers deliver affordable, high-quality meat products to consumers. The livestock industry is the corn producers' leading customer. In 2003, beef cattle were fed more than 1.4 billion bushels, while hogs consumed 1.1 billion bushels and poultry another 1.3 billion bushels.

Regardless of market, producers around the world continue to explore value-added opportunities for corn. One of the most successful efforts has been the growth of the ethanol market. Corn future and ethanol future trading have become major future trading contracts.

Fourteen percent of U.S. production goes into ethanol, while another 16 percent or 1.6 billion bushels is exported. The balance of the crop is used for food, seed and industrial uses. Solvents, cleaners, deicers and plastics are just a handful of the hundreds of renewable, corn-based products we use every day.

Corn Future Contract Specifications

Corn Futures

Size - 5,000 bushels

Tick Size - $0.025/bu

Daily Price Limit - $0.20/bu

Strike Price - N/A

Contract Months - Dec, Mar, May, Jul, Sep

Last Trading Day - Seventh business day proceeding the last business day of the delivery month

Expiration Day - N/A

Trading Hours - 9:30a.m. - 1:15p.m.

Ticker Symbol - C

Corn Options

Size - One CBOT Corn Futures

Tick Size - 1/8c/bu

Daily Price Limit - $0.20/bu

Strike Price - $0.10/bu

Contract Months - Dec, Mar, May, Jul, Sep

Last Trading Day - Last Friday proceeding the first notice day of the corresponding futures contract by at least five business days.

Expiration Day - Unexercised options expire at 10 a.m. on the first Saturday following the last trading day.

Trading Hours - 9:30 a.m. - 1:15 p.m.

What is Ethanol?

Ethanol (ethyl alcohol) is an alcohol produced by fermenting and distilling starch crops that have been converted into simple sugars. 

Ethanol can be produced from any biological feedstock that contains appreciable amounts of sugar or materials that can be converted into sugar such as starch or cellulose. Sugar cane is the predominant example of a feedstock that is converted into ethanol on a global scale. Grains (corn, wheat and barley) are another common source, with corn serving as the primary feedstock in the U.S. The European Union also uses other sources such as sugar beet molasses.

The ethanol dry-milling production process starts by grinding up the feedstock so it is more easily and quickly processed. Once ground up, the sugar is either dissolved out of the material or the starch or cellulose is converted into sugar. The sugar is then fed to microbes that use it for food, producing ethanol and carbon dioxide in the process. A final step purifies the ethanol to the desired concentration. Ethanol can also be made from a wet-milling process. The largest ethanol production facilities in the U.S. use the wet-milling process. The final product is ethanol, regardless of the sugar source.