Corn futures are standardized, exchange-traded contracts that lock in a price today for 5,000 bushels of No. 2 yellow corn to be delivered on a set future date. They trade on the Chicago Board of Trade, part of CME Group, and the same contract is used by farmers hedging a harvest, ethanol plants capping input costs, and speculators trading price direction. The price moves in quarter-cent-per-bushel increments, so each tick is worth $12.50 on a standard contract.
How a Corn Futures Contract Works
A corn futures contract is a legally binding agreement between two parties. One side agrees to deliver 5,000 bushels of corn; the other agrees to buy those bushels at a specific price on a set future date. Once the trade is executed on the exchange, both sides know exactly what they will pay or receive no matter where the cash market moves after that. That certainty is the whole point for commercial users like grain elevators and ethanol plants.
In practice, the vast majority of participants never touch a kernel of corn. Most traders close their positions before delivery by taking an equal and opposite trade. A farmer who sold a July contract will buy back the same July contract before expiration, keeping the profit or loss from the price difference. Only a small share of contracts result in physical grain changing hands.
The gap between the local cash price at a nearby grain elevator and the futures price on the exchange is called the basis. Basis varies by location, transportation costs, and local supply. A farmer in central Iowa sees a different basis than one in western Kansas, even when both are looking at the same futures quote. Understanding basis is what separates a useful hedge from a rough guess at future income.
Contract Specifications
CME Group sets rigid specifications so every contract is interchangeable regardless of who holds it.1CME Group. Corn Futures Contract Specs
- Contract size: 5,000 bushels of No. 2 yellow corn.
- Delivery months: March, May, July, September, and December.
- Minimum tick: one-quarter of one cent per bushel ($0.0025), equal to $12.50 per contract.
- Price quotation: U.S. cents per bushel.
- Trading hours on CME Globex: Sunday through Friday, 7:00 p.m. to 7:45 a.m. CT, and Monday through Friday, 8:30 a.m. to 1:20 p.m. CT.
- Last trading day: the business day before the 15th of the contract month.
Settlement prices are established at 1:15 p.m. CT, and trading in an expiring contract closes at noon on its last trading day.2CME Group. Grain and Oilseed Fact Card – Corn Futures Contract Specifications
Micro Corn Futures
CME Group also offers a Micro Corn futures contract sized at 500 bushels, one-tenth the standard contract. The minimum tick on the micro version is one-half cent per bushel, which works out to $2.50 per tick. These smaller contracts let retail traders and smaller hedgers participate without committing the capital a full-sized position requires.3CME Group. Micro Ag Futures Contract Specifications
First Notice Day and Delivery Deadlines
First Notice Day is the date when sellers may begin notifying buyers that they intend to deliver physical corn against the contract. For retail traders and speculators, this is the real deadline, not expiration. Most brokers will liquidate a speculative position before First Notice Day so the client is not assigned a delivery obligation they never intended to fulfill.
For the 2026 contracts, First Notice Day falls on the last business day of the month before the delivery month. The December 2026 contract, for example, has a First Notice Day of November 30, 2026, with first delivery on December 1 and last delivery on December 16.4CME Group. Corn Futures – Calendar
If you are trading corn futures without any interest in handling grain, exit well before these dates. Getting caught past First Notice Day can trigger forced liquidation from your broker, additional margin requirements, and a logistical headache no screen trader wants.
Physical Delivery and Quality Standards
Contracts still open after the last trading day settle through physical delivery. Sellers provide corn shipping certificates specifying a warehouse or shipping station registered (“regular”) with the exchange. These facilities cluster in designated delivery territories, including the Chicago and Burns Harbor switching district, several Illinois River shipping districts, and the St. Louis area.5CME Group. Chapter 10 Corn Futures
The benchmark deliverable grade is No. 2 yellow corn, which must meet USDA standards including a minimum test weight of 54 pounds per bushel and moisture of 14.5 percent or less.6U.S. Department of Agriculture. Subpart D – United States Standards for Corn No. 1 yellow corn is deliverable at a 1.5-cent-per-bushel premium; No. 3 yellow corn is accepted at a discount of 2 to 4 cents depending on damage and foreign material.
Daily Price Limits
The exchange imposes daily price limits to slow runaway moves during volatile sessions. For corn futures, the standard daily limit is $0.30 per bushel in either direction from the previous day’s settlement. When the market hits that ceiling or floor, trading can continue only at or within the limit price.7CME Group. Price Limits – Ags, Energy, Metals, Equity Index
Once the limit is reached, the exchange can expand it to $0.45 per bushel for the following session. On a standard contract, a $0.30 move is $1,500 per contract in a single day. During surprise USDA reports or severe weather, hitting these limits happens more often than newcomers expect, and being locked into a losing position you literally cannot close is one of the more jarring experiences in futures trading.
What Drives Corn Futures Prices
Corn is one of the more weather-sensitive commodities. A dry spell during pollination in the Corn Belt can tighten supply projections within days, and prices respond almost instantly. Weather is only part of the picture.
USDA Reports
The World Agricultural Supply and Demand Estimates (WASDE) report, published monthly by the USDA, is the single most closely watched data release in grain markets. It covers production forecasts, consumption estimates, and ending stocks for corn and other crops. Lower-than-expected ending stocks tend to push prices up; higher stocks push them down.8U.S. Department of Agriculture. WASDE Report
The May WASDE carries extra weight because it contains the first official supply and demand estimates for the upcoming marketing year. Traders build positions ahead of it based on planting intentions, and the report often triggers some of the sharpest intraday moves of the year.
Ethanol Mandates and Livestock Demand
Roughly a third of the U.S. corn crop goes to ethanol production, driven in large part by the Renewable Fuel Standard. This federal program requires a specific volume of renewable fuel to be blended into the transportation fuel supply each year. For 2025, the total renewable fuel volume requirement was set at 22.33 billion gallons.9US EPA. Renewable Fuel Annual Standards Any expansion or reduction in those mandates shifts corn demand.10US EPA. Overview of the Renewable Fuel Standard Program
Livestock producers are the other major domestic demand driver. Corn is the primary energy source in feed rations for cattle, hogs, and poultry. When herd sizes expand, feed demand rises and pulls corn prices up. Thin livestock margins and herd contractions do the opposite.
Global Competition
Brazil now ships enormous volumes of corn, with its second-crop (safrinha) harvest arriving from mid-year onward and peak exports typically hitting in the fall. Argentina adds further supply. When South American production disappoints, U.S. export demand surges and futures climb. When their harvests are strong, U.S. corn faces stiffer competition and prices tend to soften. Trade tensions and tariff changes can redirect these flows quickly.
Competing Crops
Farmers decide each spring how many acres to plant in corn versus soybeans, wheat, or other crops. When soybean prices are relatively stronger, some acreage shifts away from corn, tightening future supply. The corn-to-soybean price ratio is a metric traders watch to anticipate these acreage decisions months before USDA publishes planting intentions.
Who Trades Corn Futures
Commercial Hedgers
Hedgers are the original reason futures markets exist. A corn farmer expecting to harvest in October can sell December futures to lock in a price months in advance. If the cash price drops by harvest, the gain on the short futures position offsets the lower price received at the elevator. The farmer gives up the chance to benefit from a price rise, but revenue becomes predictable enough to secure operating loans and plan expenses.
The same logic works in reverse for buyers. An ethanol plant or feed lot that needs corn several months out can buy futures to cap its input costs. If prices spike, the gain on the long futures position offsets the higher cost of the physical grain.
Speculators
Speculators take the other side of these hedging trades. They have no corn to sell or buy but are willing to bet on price direction. Their participation provides liquidity. Without speculators, a farmer trying to sell a December contract might struggle to find a willing buyer at a fair price. Active speculative participation tightens the bid-ask spread and makes it easier for commercial users to enter and exit at competitive prices.
Position Limits
The CFTC imposes speculative position limits to prevent any single trader from accumulating enough contracts to manipulate the market. These limits cap the number of contracts a speculator can hold in the spot month, any single month, and across all months combined. Spot-month limits are the tightest and are calculated from estimated deliverable supply at the futures delivery point. Bona fide hedgers can apply for exemptions, since their positions reflect genuine commercial exposure rather than speculative bets.
Margin Requirements and Leverage
You do not pay the full value of a corn futures contract upfront. Instead, you deposit a performance bond called initial margin. As of early 2026, initial margin on a standard corn futures contract ranges from roughly $800 to $975 per contract depending on the delivery month, though these amounts change frequently as volatility shifts.11CME Group. Corn Futures Margins That means you are controlling around $20,000 to $25,000 worth of corn with less than $1,000 down.
Each day, the exchange clearinghouse marks every open position to the settlement price, crediting gains and debiting losses in real time. That process prevents debts from building up unnoticed.12CME Group. What is Clearing? If your account balance drops below the maintenance margin threshold, you receive a margin call requiring you to deposit enough to bring the account back to initial margin. Fail to meet the call promptly and your broker will liquidate the position without waiting for instructions.
The leverage cuts both ways. A $0.30 move against you on one contract is a $1,500 loss, which can exceed your entire initial margin. During limit-move days or overnight gaps, losses can run significantly larger than what is in the account. Futures trading carries the real possibility of owing your broker money beyond what you deposited, which is a fundamentally different risk profile from owning stock, where the most you can lose is what you paid.
Tax Treatment of Corn Futures Profits
Corn futures qualify as Section 1256 contracts under the Internal Revenue Code, which triggers a special tax treatment most stock traders do not get. Regardless of how long you actually held the position, 60 percent of your gain or loss is treated as long-term capital gain and 40 percent as short-term. For a trader in the top bracket, this blended treatment can produce a meaningfully lower effective rate than the 37 percent ordinary income rate that applies to short-term stock trades.13Office of the Law Revision Counsel. 26 USC 1256 – Section 1256 Contracts Marked to Market
Section 1256 contracts are also marked to market at year-end for tax purposes. Even if you are still holding an open corn futures position on December 31, any unrealized gain or loss is treated as if you closed and reopened the position at the settlement price. Your broker reports this on Form 1099-B using Boxes 8 through 11, which aggregate realized and unrealized gains across all your regulated futures contracts for the year.14Internal Revenue Service. Instructions for Form 1099-B (2026)
The 60/40 rule applies to speculators. Commercial hedgers who use corn futures as part of business operations get different treatment: gains and losses on qualifying hedging transactions are taxed as ordinary income or loss, which lets them match the character of the hedge with the character of the underlying business asset. Misclassifying a hedge can create a mismatch where gains are taxed at one rate and offsetting losses are deductible at another.