CME Group revises daily price limits for corn

CHICAGO, May 10, 2011 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, today announced it had revised its recent proposal to increase daily price limits for Corn futures and options. Pending CFTC approval, daily limits on CBOT Corn futures and options would increase to $0.40 per bushel from the current $0.30 per bushel, replacing a late April proposal to increase daily limits to $0.50 per bushel. These contracts are listed with, and subject to, the rules and regulations of CBOT.

"In response to significant increases in prices and volatility in the market, we recently proposed daily price limit increases in Corn futures," said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments, CME Group. "It's important that markets trade allowing for price transparency and risk transfer and that limit moves are infrequent so as not to prevent price discovery. At the same time, we recognize wider limits have an impact on many of our commercial customers. After significant discussion with customers and representative trade groups, we've reduced the proposed increase to $0.40 per bushel, which is a level we believe balances those two concerns."

The current price limit is $0.30 per bushel per day for Corn futures and option contracts, expandable to $0.45 and then to $0.70 when at least two contracts close at limit bid or limit offer on the previous trading day. Under the new proposal, price limits would be $0.40 per bushel per day with a max of one increase to $0.60 per bushel.

In recent months, Corn futures prices and volatility have increased significantly. In the first quarter of 2011 alone, 36 corn contract months settled at limit bid or limit offer, compared to 36 corn contract months settling at limit bid or limit offer in all of 2010.

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