VIDEO: CME Talks Corn Price Limits

[marketeye]

So, I attended a meeting the CME Group held yesterday for the industry to talk about raising the daily corn price limits from 30¢ to 40¢. The Exchange is still taking public comments on this issue, though the public comment period for the CFTC ends today. I want to take you inside the meeting with the following videos.

1. CME's Fred Seamon talks about the proposal for corn price limit increase

http://www.youtube.com/watch?v=yyHJHojJnzA

2. CME's Fred Seamon explains the course of action going forward:

http://www.youtube.com/watch?v=8T-BwpPqon0

3. CME Group's Amy McCormick explains that price limits do not impact margins

http://www.youtube.com/watch?v=m41WPCPQ8Cs

Finally, the Dow Jones Newswire story on CME targeting corn price swings.

So, what do you think about this proposal. Although there wasn't a showing of hands in favor or opposed. It seemed like most people at the meeting were opposed to the idea. What's your take?

Mike

[JG9770]

Let it alone.  John

[marketeye]

JC9770,

Why are you opposed to an increased daily limit? A lot of people feel like the industry is capitalized at $2.50 corn not $7.00 corn. I've talked with folks that agree the limits need to be raised but also feel like the problem is capital is a big challenge for those in agriculture.

Is this your feeling?

Mike

[dafeeder]

How are the current limits not working? 

[SouthWestOhio]

Did anyone discuss why or why not they might consider limits based on a percent of price?

[marketeye]

SouthWestOhio,

Yes, they did discuss this. Unfortunately, I had to step out of the meeting early. But, I was told by a person that stayed for the entire meeting that one of the CME folks said the idea of adjusting the limits by percentage at the end of each quarter is being looked at closely, if not favored. But, as to the benefits of it and the why, sorry I missed that part.

Mike

[dafeeder]

Someone must really think the corn is going to get wild to even think about doing this.  Please tell me how the current  limits are not working?

[JG9770]

Marketeye at 30 cents it goes to 45 cents the next day anyway.  John

[marketeye]

The expanded limit would be 60¢, under the new proposal.

Mike

[jec22]

I would suppose they will change it, so only the really big pockets can play.  What is broke about it now?  Not price limits.  But somewhere the powers that be must want it changed or they would not be talking about it. 

I can see it now, they change the limits.  Then something totally unforeseen hits, the market rockets higher three days.  Then we will need some more rule changes, ASAP.  Think of the drama each USDA report will bring.  Even guys that don't trade will make or lose a million on paper--inventory value change.  That is just what this country needs, more risk, more volatility.  Who are the big names behind this decision?

What I do know.

It is hot, and yes some is being taking off the top of yields here, especially on the later pollination corn.  We are trading just in time inventory.  I think the commercial thinks they have enough for just in time for harvest, especially with the hot weather pushing the crop forward.  Then they can kick the supply problem down the road until next summer and work on just in time then.  I would do the same if I was in their shoes.

The official flower of the I80 in Iowa must be the Canadian thistle.  The seeds are flying around like snowflakes in December.