Every ag market has a season: a planting, a growing weather window, a harvest. Master the calendar of the crop and you understand when it's vulnerable, when supply arrives, and why the same news is bullish in June and irrelevant in November.
7.1Grains & oilseeds
The big grain and oilseed contracts trade on the CBOT (part of CME), priced in cents per bushel, 5,000 bushels per contract.
| Crop | Ticker | Notes |
|---|---|---|
| Corn | ZC | The largest US crop; feed, food and ethanol. Watch the corn–ethanol and corn–feed links. |
| Wheat | ZW / KE / MW | Three US contracts: Chicago soft red (ZW), Kansas hard red winter (KE), Minneapolis hard red spring (MW) — different qualities and regions. |
| Soybeans | ZS | The premier oilseed; processed ("crushed") into meal and oil (next section). |
| Soybean meal | ZM | Animal feed (the protein). Priced in $/short ton. |
| Soybean oil | ZL | Cooking oil & biodiesel (the fat). Priced in cents/lb. Links to the veg-oil complex. |
| Rice / Oats | ZR / ZO | Smaller, thinner contracts. |
7.2The soybean crush — agriculture's version of the crack spread
A processor buys soybeans and "crushes" them into meal and oil. The margin between the bean cost and the combined product value is the crush spread — directly analogous to the refiner's crack spread in oil (Part 5.3). One bushel of soybeans (60 lb) yields roughly 44 lb of meal and 11 lb of oil.
Convert to consistent units. Meal ZM quotes $/short ton (2,000 lb); oil ZL quotes cents/lb; beans ZS quote cents/bushel. Yields per bushel: 44 lb meal, 11 lb oil.
Beans $12.00/bu, meal $360/ton, oil 45¢/lb:
Oil value = 11 × $0.45 = $4.95
Product total = 7.92 + 4.95 = $12.87
Crush = 12.87 − 12.00 = $0.87 per bushel
That 87¢ is the processor's gross margin. Crushers buy beans / sell products to lock it in; speculators trade the spread on the view that crush margins will widen (strong meal/oil demand) or compress. The "reverse crush" bets the other way. The unit conversions are the whole game here — get the 2,000 and the 44/11 right and the rest is arithmetic.
7.3The vegetable-oil complex & palm oil
Edible oils are substitutes, so they trade as a connected complex. The big four are palm oil, soybean oil, rapeseed/canola oil and sunflower oil. The swing benchmark — and the world's most-produced and most-traded vegetable oil — is palm oil.
Palm oil is the benchmark because it's the cheapest and highest-yielding oil per hectare, used in roughly half of supermarket products plus biodiesel. Supply is concentrated in Indonesia and Malaysia, so their export policies and weather (El Niño droughts) swing the global market.
Put both in $/tonne. Soybean oil 45¢/lb → 45 × 22.046 = $992/t. Palm oil 3,900 MYR/t at 4.6 MYR/$ → 3,900 ÷ 4.6 = $848/t:
Buyers switch to whichever oil is cheaper, so the spread mean-reverts: when palm gets too cheap versus soy, demand shifts to palm and the gap closes. Traders play the spread rather than flat price — note you must also handle the FX (MYR/USD) leg, an extra risk that flat-price soy oil doesn't carry.
7.4Softs — coffee, sugar, cocoa, cotton, orange juice
"Softs" are tropical/semi-tropical cash crops, mostly traded on ICE in New York and London. They're smaller markets, which makes them more volatile — a single weather event in a concentrated growing region can send them limit-up.
| Soft | Ticker | What drives it |
|---|---|---|
| Coffee — Arabica | KC | Higher-quality bean; Brazil & Colombia. Brazilian frost or drought is the classic spike catalyst. |
| Coffee — Robusta | RC | Cheaper, more caffeine; Vietnam-dominated. Used in instant coffee & blends. |
| Sugar — #11 (raw) | SB | Global raw sugar; Brazil is swing producer. Linked to ethanol — high oil/ethanol prices pull cane toward fuel, tightening sugar. |
| Sugar — white | W | Refined sugar (London). The white–raw spread is the refiner's margin. |
| Cocoa | CC | Chocolate. Supply hugely concentrated in West Africa (Ivory Coast, Ghana) — disease & weather there move the world price. |
| Cotton | CT | Fibre; competes with polyester (so linked to oil) and tracks the apparel/consumer cycle and the US/China trade flow. |
| Orange juice (FCOJ) | OJ | Frozen concentrated OJ; tiny market, Florida & Brazil. Hurricanes, frost and citrus disease cause violent moves — the textbook thin, weather-driven contract. |
| Lumber | LBR | Housing-cycle and rate-sensitive; thin and famously volatile. |
Markets like orange juice, cocoa and lumber are small enough that liquidity vanishes exactly when you need it, "limit moves" (exchange-imposed daily price caps) can lock you out of exiting for days, and spreads gap. You can be completely right on the weather and still be stopped out by a gap or unable to get out at all. The discipline from Part 1.7 matters most here: size these as if the stop might not fill where you want, because sometimes it won't.
7.5Livestock
The CME livestock complex is unusual because the product is alive and perishable — you can't store a steer indefinitely, and feed costs (corn, soymeal) flow straight into margins.
- Live cattle (
LE) — market-ready cattle. - Feeder cattle (
GF) — younger cattle to be fattened; their price moves inversely to corn (cheap feed = feedlots pay more for feeders). - Lean hogs (
HE) — pork; highly seasonal and exposed to disease outbreaks (e.g. African swine fever) and export demand, especially from China.
7.6Weather, the WASDE & seasonality
Three cross-cutting forces govern all of ag:
- Weather — the dominant short-term driver. Drought, frost, flood and the El Niño/La Niña cycle reshape supply. Ag desks watch forecast models as closely as gas desks do.
- The WASDE — the USDA's monthly World Agricultural Supply and Demand Estimates report, the single biggest scheduled catalyst in grains and oilseeds. It sets official supply, demand and ending stocks numbers; a surprise versus expectations moves markets instantly. The stocks-to-use ratio (inventory ÷ consumption) is the key tightness gauge.
- Seasonality — prices often build a "weather premium" into the Northern Hemisphere growing season (roughly May–August for US grains) and soften into harvest as supply arrives. Southern Hemisphere crops (Brazil, Argentina, Australia) run on the opposite calendar, so the global supply clock never fully stops.
| Catalyst | Simple reaction | The non-obvious second-order |
|---|---|---|
| Drought in a key growing region | Supply fear → price up | Prices often peak before the worst is confirmed (weather premium), then fall on the first decent rain — "sell the rumour" in reverse. |
| Bearish WASDE (big stocks) | Oversupply → price down | The market trades the surprise vs expectations, not the absolute number — a "bearish" report can rally if the trade expected even worse. |
| High crude / ethanol prices | — | Pull corn into ethanol and cane into ethanol → tightens corn & sugar. Energy and ags are linked through biofuels. |
| Strong dollar | US crops less competitive on export → price down | A big buyer (China) stepping in can override the dollar entirely for soybeans. |
Grains and oilseeds are large, liquid global markets (corn, wheat and soybeans each represent tens of billions of dollars of annual production and deep futures). The softs are far smaller — orange juice in particular is one of the tiniest listed futures markets, which is exactly why it's so explosive. Match your size to the market's depth. Verify with the USDA / exchange.