Exchanges expand daily price limits for wheat futures

by Staff
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KANSAS CITY — The CME Group, the Kansas City Board of Trade and the Minneapolis Grain Exchange today implemented new price limits for wheat futures and mini-sized wheat futures. The new price limits were set at 60c per bu above or below the previous day’s settlement price. This was an increase from the previous limit of 30c.

The trading groups said the expansion of price limits was necessary because of extremely high price levels and volatility during the past year. The belief was expanded limits will allow wheat contracts to continue performing price discovery and risk mitigation functions without being constrained by limit price moves. Working together, the exchanges hoped to help customers avoid additional risks.

Under the new limits, the exchanges said if two or more wheat futures contract months within a crop year close at limit bid or limit offer, the daily price limits for all contract months on that exchange will increase 50% the next business day and an additional 50% each subsequent day two or more contract months within a crop year close at limit bid or limit offer. In addition, daily price limits will revert back to 60c after no wheat futures contract months closes limit bid or limit offer for three consecutive days. Finally, there will be no price limits on the current month contract on or after the second business day preceding the first day of the delivery month except in Minneapolis.

In early trading Monday, Minneapolis old crop futures locked limit up at the open. Kansas City March and May futures also were limit up early before trading lower after the first few minutes of the session.

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