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CME Group, the world's largest and most diverse derivatives exchange, today announced that the Commodity Futures Trading Commission (CFTC) has approved new daily price limits to begin March 28, 2008, for corn, mini-sized corn, soybeans, mini-sized soybeans and soybean oil futures and options on futures contracts.
"The CFTC's accelerated review and approval is an impressive show of responsiveness to the markets' needs," said Robert Ray, CME Group Managing Director, Commodities, Equities and International Sales. "Price levels and volatility for these grains and oilseeds have increased significantly in recent years. Expanding price limits will allow market participants to continue to utilize the contracts for price discovery and risk mitigation at levels more aligned with today's market environment."
Corn price limits will be increased to $0.30 from $0.20 per bushel, soybeans to $0.70 from $0.50 per bushel and soybean oil to $0.025 from $0.020 per pound.
In addition, daily price limits for wheat, mini-sized wheat, corn, mini-sized corn, soybeans, mini-sized soybeans, soybean meal, soybean oil, oats and rough rice futures can expand twice, by approximately 50 percent each time, when market conditions dictate that an expansion is warranted. Expanded price limits will take effect the following trading session when the price of two or more futures contract months within the first five to eight listed non-spot contract months (depending on the commodity's crop year), or the final contract month of a crop year, closes at limit bid or limit offer. Daily price limits for these commodities will step back to their prior levels when no futures contract month for that commodity closes at limit bid or limit offer that day.
Price limits will continue to be removed on the current contract month beginning on the second business day preceding the first day of the delivery month. The premiums on options are subject to the same daily price limits as the underlying futures except that there are no daily price limits on option premiums on the last day of trading in an expiring option.
These changes supercede the recent changes to the daily price limits for CBOT Wheat contracts and cap the maximum daily price limit, after two expansions, at $1.35 per bushel. The Kansas City Board of Trade has announced that it is adopting the same price limits policy for its wheat contracts.
For more information, please go to http://www.cmegroup.com/rulebook/rulechanges.
