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Market Matters Blog 04/29 15:36
CME Announces Resetting of Price Limits for Grain, Oilseeds, Lumber
CME announced the resetting of price limits for grain, oilseed and lumber
futures as of trade date May 1, under its variable price limit mechanism
enacted in March 2014, which resets price limits every six months in each of
the CBOT grain, oilseed and, added later, lumber futures contracts.
Mary Kennedy
DTN Basis Analyst
Effective April 30 for trade date May 1, the Board of Trade of the City of
Chicago Inc. ("CBOT" or "Exchange") will reset price limits for grain and
oilseed futures.
"This is the first of the two price limit resets in 2024 that is stipulated
by the variable price limits mechanism pursuant to each product's respective
Rulebook Chapter," according to a CME press.
Corn futures price limit will go from 35 cents per bushel to 30 cents with
extended price limit of 45 cents. Oats futures price limit will go from 30
cents per bushel to 25 cents with an extended price limit of 40 cents.
Soybean futures price limit will go from 95 cents per bushel to 85 cents
with extended price limit of $1.30. Soybean oil futures price limit will go
from $0.040 per pound to $0.035/pound with extended price limit of
$0.055/pound. Soybean meal futures price limit will stay at $25 per ton with
extended price limit unchanged of $40 per ton.
Chicago wheat futures and Kansas City wheat futures price limit will go from
50 cents per bushel to 40 cents with extended price limit of 60 cents. All
other price limits affected can be found at
https://www.cmegroup.com/content/dam/cmegroup/notices/ser/2024/04/SER-9363.pdf.
In 2014, CME Group put a new percentage-based daily price limit procedure in
CBOT grain and oilseeds products, including corn, soybeans, CBOT wheat, Kansas
City wheat, soybean meal, soybean oil, oats and rough rice.
CME noted, "The new methodology is a more flexible, transparent and
market-based price-limit setting mechanism. It would allow price limits to
expand under high prices, but also allow price limits to retract when prices
fall."
The new variable price limit mechanism will allow higher limits when prices
are high and lower limits when prices are low.
"The new variable price-limit mechanism resets price limits in each of the
CBOT grain and oilseed futures contracts every six months, with the first reset
date being on the first trading day in May," according to the CME.
Here is the entire table of all new price limits and links mentioned by the
CME in the April 23 announcement:
https://www.cmegroup.com/content/dam/cmegroup/notices/ser/2024/04/SER-9363.pdf
Here is the March 12, 2014, variable price limit announcement to better
understand the process:
https://www2.dtn.com/ag/assets/SER-7038-PriceLimit-FS-CG.pdf
Mary Kennedy can be reached at Mary.Kennedy@dtn.com
Follow her on social platform X @MaryCKenn
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