New Grains Markets Daily Price Limits Begin in May
New price limits for corn will be 35 cents a bushel, Kansas City Wheat 50 cents an bushel and CBOT wheat 45 cents a bushel The first reset date will be this Thursday, the first of May. Jackson Commodities’ Henry Kornegay says
Kornegay: “Our market will become more of a reasonable market, instead of a market that is being driven by outside sources — i.e. index funds, big hedge funds coming into the market — those are the ones that tend to push the markets real hard one way or the other. That is what increases the volatility when they start moving millions and millions into the market if they think that corn is too cheap or wheat is too cheap so they come in and buy it. That is what takes these daily limits and push them up. So for the producers it should really give him a chance to look at his marketing programs with a little more stability in to them knowing that the volatility has come down and i.e. a lot of these index funds have exited the markets.”
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. Under the new methodology, daily price limits will be reset every six months.