- What does new crop mean?
- What is the underlying of a new crop weekly?
- How many contacts are listed at a given time?
- Why are the contacts only listed February through August?
- How much lower is New Crop option premium vs. old crop?
- Do New Crop Weekly options have the same specifications as other Corn and Soybean options?
- How are New Crop Weekly contract margined?
- What are the fees for a New Crop Weekly option?
1. What does new crop mean?
The terms old crop and new crop refer to grains produced in different crop years. The USDA defines the North American crop year as October through September of the following year.
In general, old crop represents grain that has already been harvested, while new crop represents crops that will be harvested the next fall. Old crop and new crop futures are both based on the same commodity but are fundamentally very different and can act accordingly.
2. What is the underlying of a new crop weekly?
Corn is the underlying of the December contract. Soybeans are the underlying of the November contact.
3. How many contacts are listed at a given time?
New Crop Weekly contracts have three consecutive maturities listed at a time. If a Short-Dated New Crop option has an expiration, a New Crop Weekly will be listed the following week. The listing schedule follows the same logic of the Ag Weekly complex.
4. Why are the contacts only listed February through August?
Given the seasonal nature of Corn and Soybeans, the need for short-term coverage on New Crop futures is only present during this time frame based on the North American planting schedule.
5. How much lower is New Crop option premium vs. old crop?
The premium savings between old crop and new crop is seasonal and can vary based on market conditions. Historically, premium can be 15%-20% lower in the first half of the year for a new crop one-week option compared to an old crop premium.
This premium differential typically converges as the North American summer approaches.
6. Do New Crop Weekly options have the same specifications as other Corn and Soybean options?
New Crop Weekly options have the same tick size, strike interval and expiration process as standard Corn and Soybean options, which allow for spreading capabilities.
7. How are New Crop Weekly contract margined?
New crop options follow the same margining style as other CBOT Ag options.
8. What are the fees for a New Crop Weekly option?
Fees follow the same schedule of standard CBOT Ag options.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
