Corn Futures and Options are derivatives contracts which give investors exposure to the international price of corn. The underlying contract is the corn derivative contract as traded on the Chicago Board of Trade (CBOT).The product gives local investors an innovative tool to hedge international price risk and the opportunity to better assess patterns in the global corn market. Contracts are cash-settled in Rands and easily accessed via JSE commodity derivatives members.
Who is this for?
Hedgers such as producers and consumers of grain seeking to protect themselves against adverse price movements with a view that the international market is an alternative hedge . The Chicago Corn Futures are also traded by speculators who aim to make a profit on short-term movement in the future contract price. As well as speculators who hope to benefit from the spread opportunities between the local vs international market. Anyone involved with the agricultural industry can use this product to help contain costs and enhance income.
Features
- Versatile
- Easily accessible with a contract traded and settled in ZAR
- Enables effective price risk management
- Enables identification of short and long term price and volatility patterns
- Hedge or gain exposure
- Enables realisation of arbitrage and spread opportunities between the US corn and South African white/yellow maize
- Temperature, precipitation and the changing needs of customers all contribute to the supply and demand for commodities such as corn which translates into a greater risk of loss
How to get it
To access Corn Futures and Options, an investor needs to register as a client with an authorised member firm, deposit the required initial margin and sell or buy according to their needs.
Qualifying factors
- No limits apply to individuals, foreigners or corporate entities
- Pension funds and long term insurance companies subject to their 25% foreign allocation limits
- Asset managers and registered collective investment schemes subject to their 35% foreign allocation limits
- For the full details relating to qualifying factors, speak to your broker
Margin requirements
Initial margin changes are based on market volatility and current face value of the contract. Please consult the web page for the latest initial margin requirements. The exchange also provides for calendar spread margin (offset between different expiry months) as well as series spread margin for selected products. It is important to include the difference in the initial margin requirements when determining the total series spread margin.