Glossary
Plain-language definitions for terms used across this site, written for farmers, students, traders and anyone else trying to make sense of agricultural markets.
A
Anti-Dumping Duty
An extra import tariff on goods found, after an investigation, to be sold abroad below their normal value; permitted under WTO rules. China’s duties on Australian barley from 2020 to 2023 are a well-known farm example — they effectively shut Australia out of its largest barley market.
Arabica
The coffee species (Coffea arabica) behind most of the world’s output and nearly all specialty coffee — milder and more aromatic than robusta, grown at higher altitudes in countries such as Brazil, Colombia and Ethiopia. Its benchmark is the ICE “C” contract in New York.
B
Backwardation
A futures market where prices for nearer delivery dates are higher than for later ones - unusual for a storable commodity, and typically a sign of tight near-term supply, since buyers will pay more to get the commodity now rather than wait. The opposite of contango.
Basis
The difference between a local cash price (what you'd actually be paid at your grain elevator or buyer) and the nearby futures price on an exchange. A key concept for anyone selling into a market that references futures prices, since it captures local supply/demand, transport cost and quality differences the futures price itself doesn't reflect.
Benchmark Price
A single reference price meant to represent an entire global or regional market, rather than any one specific transaction, region or quality grade. The World Bank Pink Sheet prices used throughout this site are benchmark prices, not necessarily what any individual farmer or buyer paid.
Blending Mandate
A legal requirement to mix a minimum share of biofuel into road fuel — such as the US Renewable Fuel Standard, the EU’s renewable-energy rules for transport, or Brazil’s ethanol blend in gasoline. Mandates create demand for corn, sugarcane and vegetable oils that barely reacts to price, tying these crops to energy policy.
Bushel
A US customary unit historically defined by volume, but standardized today as a fixed weight per crop (e.g. 27.2155 kg for wheat, 25.4012 kg for corn) rather than a fixed volume, since different grains pack to different densities. Still the standard trading unit on US exchanges like the CBOT.
C
Call Option
The right, but not the obligation, to buy a futures contract at a set price (the strike) before a set date, in exchange for a premium. A buyer of grain or feed can use one to cap the price they will pay while still benefiting if prices fall; the mirror image of a put option.
Carcass Weight
The weight of a slaughtered animal once it has been dressed — bled, with the internal organs and, depending on the species, hide, head and feet removed. Meat prices are often quoted per kilogram of carcass weight (EU pig prices per 100 kg, for example), which is why they are well above live-weight prices for the same animal.
CBOT (Chicago Board of Trade)
The Chicago futures exchange where the world’s benchmark contracts for corn, soybeans, soybean meal, soybean oil and soft red winter wheat trade. Part of CME Group since 2007; when a market report says “corn rose in Chicago”, this is the market it means.
CIF (Cost, Insurance and Freight)
A delivery term under which the seller also pays freight and insurance to the named destination port, so a CIF price includes shipping. The risk still passes to the buyer once the goods are on board at the port of shipment — only the costs run further.
Clearinghouse
The institution that sits between every buyer and seller on a futures exchange, guaranteeing that both sides of every trade are honored even if one party defaults. This is what makes exchange-traded futures more secure - but also more standardized and less flexible - than a private forward contract.
Commitments of Traders (COT)
A weekly report from the US Commodity Futures Trading Commission (CFTC) showing who holds open futures and options positions on US exchanges — commercial hedgers, managed-money funds and others. Published on Fridays with data as of the preceding Tuesday, it is widely read to gauge how heavily funds are betting on rising or falling prices.
Common Agricultural Policy (CAP)
The EU’s joint farm policy since 1962, financed from the EU budget: direct payments to farmers, market measures such as public intervention buying and private storage aid, and rural development funding. It shapes production and prices in the EU — and with them the EU prices shown on this site.
Consumer Price Index (CPI)
A measure of how the prices of a typical basket of consumer goods and services change over time — the usual yardstick for inflation. This site uses the US CPI-U to show prices in inflation-adjusted (real) terms.
Contango
A futures market where prices for later delivery dates are higher than for nearer ones, reflecting the cost of storing and financing a commodity until then. The normal state for most storable commodities; the opposite of backwardation.
Convergence
The way a futures price and the physical cash price move toward each other as the contract’s delivery date approaches. If they didn’t, traders could profit without risk by buying the cheaper one and delivering against the dearer one — which is exactly what pulls the two together.
Cost of Carry
What it costs to hold a stored commodity until a later date: storage, insurance and interest on the money tied up in it. In a normal market the price for later delivery sits above the nearby price by at most about this amount — which is what decides whether storing grain pays.
Crush Margin
The difference between what a processor pays for a raw commodity (e.g. soybeans) and what they can sell its processed products for (e.g. soybean oil and soybean meal combined) - the profit margin that determines how much processing capacity actually gets used, and a driver of prices for the raw input and its processed products alike.
E
El Niño
The warm phase of a recurring Pacific climate pattern (ENSO) that shifts rainfall around the world every few years. It tends to raise drought risk in Australia, Southeast Asia, India and southern Africa and bring more rain to parts of South America — moving prices for wheat, rice, palm oil, sugar and more. La Niña is the cool opposite phase.
Ending Stocks
The quantity of a commodity still in storage at the end of a marketing year, which carries over as the next year’s opening stocks. One of the most-watched numbers in USDA’s WASDE report.
Euronext (MATIF)
The Paris-based futures market for European milling wheat, rapeseed and corn, still often called by its old name MATIF. Its milling wheat contract is the main price reference for wheat in the EU, the way CBOT is for US grain.
Export Restriction
A government limit or ban on exporting a commodity, usually to protect domestic supply during a shortage. Can cause sharp price spikes in countries that depended on those exports, even when nothing changed in their own domestic harvest.
Export Tax
A levy a government charges on goods leaving the country, often to hold down domestic food prices or raise revenue. Argentina has long taxed soybean exports, and Russia introduced a floating duty on wheat exports in 2021; both lower what local farmers receive compared with world prices.
F
FAO Food Price Index
A monthly index of international prices for a basket of food commodities — cereals, vegetable oils, dairy, meat and sugar — published by the UN Food and Agriculture Organization, with 2014–2016 = 100. The most-quoted single gauge of whether food is getting more or less expensive worldwide.
Feed Wheat
Wheat sold as animal feed, either because it was grown for that purpose or because it missed milling specifications — after rain at harvest, for example. It trades at a discount to milling wheat and competes directly with corn and barley in feed rations.
FOB (Free on Board)
A delivery term under which the seller covers all costs until the goods are loaded onto the ship at the port of shipment; freight and insurance from there are the buyer’s. Export prices are usually quoted FOB a named port — “FOB Rouen”, “FOB US Gulf” — which makes different origins comparable before shipping costs.
Forward Contract
A private, off-exchange agreement between two parties to buy or sell a commodity at a set price on a future date - the direct counterpart to a futures contract, but negotiated directly (often through a grain elevator or buyer) rather than traded on an exchange, and not backed by a clearinghouse.
Fungible
Interchangeable - one unit is treated as equivalent to any other unit of the same grade, regardless of exactly where or by whom it was produced. Wheat or crude oil of a given grade is fungible; a specific parcel of farmland is not. Fungibility is what makes standardized futures contracts and blended national or global benchmark prices possible in the first place.
Futures Contract
A standardized agreement to buy or sell a fixed quantity of a commodity at a set price on a future date, traded on an exchange like the CME or Euronext and guaranteed by its clearinghouse. Used both by producers and processors to lock in a price ahead of time (hedging) and by financial traders speculating on price moves.
H
Hedging
Using a futures or forward contract to lock in a price in advance, reducing exposure to price swings between now and when a crop is actually sold or an input is actually bought. The opposite of speculating: the goal is to reduce risk, not to profit from price moves.
Hog Cycle
The recurring boom-and-bust pattern of pig prices: high prices lead farmers to keep more sows, the extra pigs reach the market many months later and push prices down, herds are cut back, and prices recover. Described by economists as early as the 1920s and still visible in pork markets today.
I
ICE Futures
The futures markets of Intercontinental Exchange, home of the benchmark contracts for most soft commodities: arabica coffee (the “C” contract), raw sugar No. 11, cocoa and cotton No. 2 in New York, and robusta coffee, London cocoa and white sugar in London. Canadian canola futures also trade on ICE.
M
Malting Barley
Barley good enough to be turned into malt for beer and whisky: it must germinate reliably and stay within a narrow protein range. Maltsters and brewers pay a premium over feed barley for it, so a weather-hit crop that fails the specifications can lose much of its value.
Margin Call
A demand from a broker or clearinghouse to deposit more money after a futures position has lost value and the account has fallen below the required minimum. Margin calls are why even a sound hedge can strain a farm’s or merchant’s cash flow when prices move sharply.
Marketing Year
A crop's own 12-month accounting period, running from one harvest to just before the next rather than the calendar year - timing differs by crop and country (e.g. US corn: September-August; EU wheat: July-June). Prices, stocks and the WASDE's season-average price are usually reported by marketing year, so a "2026/27" figure spans parts of two calendar years.
Metric Ton
1,000 kilograms - the standard weight unit for most agricultural commodity prices worldwide, apart from US exchanges that still quote grains per bushel.
Milling Wheat
Wheat that meets the quality specifications flour millers require — enough protein, a sound falling number (no sprouting) and a good test weight — and therefore earns a higher price than feed wheat. Exchange contracts such as Euronext’s milling wheat define the minimum quality that can be delivered.
N
NPK
Shorthand for the three primary plant nutrients supplied by fertilizer: nitrogen (N), phosphorus (P) and potassium (K). A fertilizer's "NPK number" (e.g. 10-10-10) states the percentage of each by weight.
O
Open Interest
The number of futures or options contracts still open — bought and sold, but not yet closed out or delivered. Open interest rising together with the price is usually read as new money entering the market; falling open interest as positions being closed.
Option Premium
The upfront price paid to buy an option (like a put option), similar to an insurance premium - paid regardless of whether the option is ever used, in exchange for the right it grants.
P
Pink Sheet
The World Bank's monthly "Commodity Markets Outlook" report - an informal nickname (from the original paper edition's color) that happens to be shared, unrelated, with a US penny-stock listing service. This site's global benchmark prices come from it.
Planted Area
The area sown to a crop in a season. Together with yield it decides the size of the harvest, which is why USDA’s Prospective Plantings report (end of March) and Acreage report (end of June) can move grain prices sharply.
Producer Price
The price actually received by farmers at the farm gate, before further transport, processing or retail markups. Differs from, and is usually lower than, retail or export prices for the same commodity.
Protein Content
The share of protein in grain, measured in a laboratory. In wheat it largely decides baking quality, so higher-protein lots earn premiums; in malting barley, by contrast, too much protein is a defect. It depends on variety, nitrogen fertilization and weather.
Put Option
The right, but not the obligation, to sell a futures contract at a fixed price (the strike) before a set expiration date, bought for an upfront premium. Used to set a price floor without giving up the chance of a higher price later, unlike a straight futures hedge.
R
Real Price
A price adjusted for inflation and expressed in the purchasing power of one reference date, usually today. Real prices show whether a commodity really got more expensive over the decades, or whether its nominal price just rose along with everything else.
Robusta
The hardier coffee species (Coffea canephora), grown at lower altitudes, with more caffeine and a harsher taste; used mainly in instant coffee and espresso blends. Vietnam is the largest producer, followed by Brazil (where it is called conilon); the benchmark is ICE’s London robusta contract.
S
Settlement Price
The official price an exchange sets for each futures contract at the end of every trading day. It is used to value open positions and calculate margin, and it is what most price reports quote as the day’s “close”.
Skimmed Milk Powder (SMP)
Powder made from skimmed milk, with almost no fat (at most about 1.5%). Used mainly in food manufacturing and animal feed; the EU, the US and New Zealand are major exporters, and in the EU it is one of the products public intervention can buy up when prices fall very low.
Speculation
Trading with the goal of profiting from a price move, rather than to protect against one - the opposite of hedging. Speculators add liquidity to futures markets, making it easier for producers and processors to hedge, even though they have no direct stake in the physical commodity.
Spot Price
The price for immediate delivery, as opposed to a futures price for delivery at a set date in the future.
Spread
The price difference between two related contracts — most often two delivery months of the same commodity (a calendar spread), but also two commodities (wheat against corn) or two locations. Traders often watch spreads more closely than outright prices, because they show how tight supply is now compared with later.
Stocks-to-Use Ratio
Ending stocks as a share of a year’s total use — how large the stockpile left at the end of the season is compared with what gets consumed. A low ratio means a thin buffer, so prices react more sharply to any crop problem.
T
Tariff-Rate Quota (TRQ)
An import regime with two tariff levels: a limited quantity enters at a low (or zero) duty, anything above it pays a much higher one. Common for sugar, dairy and meat — and a main reason domestic prices in the EU or US can sit well above world prices.
Test Weight
The weight of a fixed volume of grain — kilograms per hectolitre in Europe, pounds per bushel in the US. A high test weight signals well-filled kernels and a good flour yield, so contracts set minimums and buyers discount light grain.
V
Volatility
How much and how quickly a price moves up and down over a given period. High volatility means large swings are common, which matters for anyone timing a sale or purchase, not just for financial traders.
W
WASDE
Short for World Agricultural Supply and Demand Estimates - the USDA's monthly report projecting production, consumption, stocks and season-average prices for major crops in the US and worldwide, one of the most closely watched releases in agricultural markets. See the Market Reports page for the latest figures.
Whole Milk Powder (WMP)
Milk with nearly all its water removed but its fat kept (typically around 26%). It keeps for a long time and ships cheaply, which makes it one of the main forms in which dairy is traded internationally; New Zealand is the largest exporter.
Y
Yield
How much a crop produces per unit of land — tonnes per hectare in most of the world, bushels per acre in the US. A harvest is yield times area, so yield estimates during the growing season are among the numbers that move prices most.
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