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The Learn About Futures Insider : Continuous Commodity Index

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July 07, 2011 – Comments (0)

Though it has gone through many revisions since the inaugural use, the Continuous Commodity Index (CCI) has aimed to provide an accurate representation of commodity price trends. Contract specifications refer to the CCI futures on ICE Futures US.

Contract Size: $500 x Index

Price Quote & Tick Size: Quoted in index points, to two decimal places. (e.g.,300.05, 300.10, 300.15).01 = $5; tick size is .05 = $25

Contract Months: January, February, April, June, August and November

Trading Specs: Futures trade on ICE US from 2:30 am to 2:45 pm next day

Daily Price Limit:  None as of publishing; please consult exchange for additional details on limits.

Trading Symbols: CI
 
CCI Facts


The Commodity Research Bureau first developed an index based on commodity prices in the middle part of the last century. Originally, it was composed of twenty-eight commodities. The current representation of the CCI contains seventeen. They include:

•    Crude Oil
•    Heating Oil
•    Natural Gas
•    Corn
•    Soybeans
•    Wheat
•    Copper
•    Cotton
•    Live Cattle
•    Lean Hogs
•    Gold
•    Platinum
•    Silver
•    Cocoa
•    Coffee
•    Orange Juice
•    Sugar #11

This kind of index may be more difficult to understand than a basket of stocks since the active contract for each commodity changes. The change occurs when the nearby futures contract expires. For this reason, this kind of index may have to be rebalanced. The original CRB index was also heavily weighted towards commodities in the agricultural sector. Now, the balance is relative to the following chart:
http://futurespress.com/imgndoc/LAF/LAFWeekly_CRBIndex.jpg

Key terms for this market include:


Commodity Index - a fixed-weight or weighted index of the prices for select commodities. The index may use futures or spot market prices.
 
Key Uses


CCI futures may be incorporated into strategies to hedge cash market positions, diversify holdings, or as a means to trade a directional bias on the possible future price trends for commodities.

Key Concerns


Since commodity prices are the constituents of the index, the CCI may be influenced by some or all of the same things which will cause fluctuations in commodity prices. These could include – but are not limited to – events or fundamentals like the following:

•    Industry reports
•    Inventories or supply reports for specific commodities
•    National or global recessions
•    Weather issues
•    Crop reports
•    Central bank meetings or policy changes
•    US dollar movements
 

 
Disclaimer:  There is a substantial risk of loss in futures trading and it is not suitable for all investors.  Losses can exceed your account size and/or margin requirements.  Commodities trading can be extremely risky and is not for everyone.  Some trading strategies have unlimited risk.  Educate yourself on the risks and rewards of such investing prior to trading.  Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise).  Past results are by no means indicative of potential future returns.  Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract.  Information provided is compiled by sources believed to be reliable.  Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled.  Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc .

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