Tuesday, April 27, 2021

"CME Group Expands Daily Price Limits for Grains"

 Action baby, action.

For some reason I've got Elvis Presley's Viva Las Vegas as this year's theme song and I'm not sure that will be appreciated by people who like to, ah, eat.

Two from AgWeb. First up, the headline story, April 26:

The CME Group announced after a routine biannual review, it has decided to expand daily price limits for Chicago Board of Trade grain and soy futures. The new limits will take effect May 2 for trades dated May 3.

Here are some of the new limits. (It also widened limits for oats, rough rice, lumber futures and other grain futures contracts.)

  • Corn: 40¢ per bu. (currently at 25¢ per bu.)
  • Soybeans: $1 per bu. (70¢ per bu.)
  • Soymeal: $30 per short ton ($25 per short ton)
  • Soy oil: 3.5¢ per lb. (2.5¢s per lb.)
  • SRW and HRW wheat futures: 45¢ per bu. (40¢ per bu.)

Price limits represent the maximum price range permitted for a futures contract in each trading session, according to CME. Price limits vary from product to product, as does what happens when a price limit is hit. Grain futures, for example, have daily hard limits. 

“Some of these limits are expanded by 50%,” says Jerry Gulke, president of the Gulke Group. “That’s huge volatility.”

For example, he says, limit up and limit down in corn will now be 80¢. On 200 bu.-per-acre corn that’s $160 an acre. On 10,000 acres, gross income could move around $1.5 million in one day....


Wheat is up another 3.00% today:

And corn is right there with it, up 2.93%


And also from AgWeb, April 23:

Will High Prices Cause Demand Destruction or Demand Reduction?

Wow. This week saw corn prices top $6 and soybean prices top $15.

July corn prices were up 61.25¢ and July soybean prices were up 94.25¢, for the week ending April 23. July wheat prices were up 59.50¢.

“We’ve sat sideways here for almost eight years, and now we’ve blew up,” says Jerry Gulke, president of the Gulke Group. “These are unprecedented moves. If we would had moves like that in a year, we’d thought we were lucky.”

What caused these major moves? Both supply and demand are at play, Gulke says.

From a supply standpoint, challenges are surfacing for the South American crops. Dry weather is starting to reduce production estimates.

“Watching markets on a weekly basis should make for interesting times ahead and give volatility a whole new meaning especially with new limits widened appreciably,” Gulke says. “There’s an old saying the markets will shake the loose leaves off the trees, but none of us have ever seen volatility like this.” ....


Well, that was before the expanded limits.

"Bright light city gonna set my soul Gonna set my soul on fire 
Got a whole lot of money that's ready to burn So get those stakes up higher...."