A few days ago I received some questions about price limits in corn, soybeans, soymeal and soyoil. In the agriculturals there is a limit of how much a contact can move in any one day. The limits are as follows:
Limits in Corn, Soybeans, Soymeal and Soyoil
- Corn 30 cents
- Soybeans 70 cents
- Soymeal and
- Soyoil 20 cents
If any of these markets close at the limit, the following day’s limits are increased as to get the market moving again and allow appropriate price discovery. The issue is when one finds themselves in a position and the market “Locks Limit”. This can be a harrowing and expensive endeavor.One would ask what is to be done if one finds themselves in such a lock limit situation, the first option is attempting to go out into the deferred months of the same product and offset one’s positions (this may be difficult due to the deferred contracts may well be in a locked limit situation, as well). The other option is to use the option market and offset the positions using options.
There are other ways to offset positions. However, these alternatives become more involved. The bottom line is that none of these options are pleasant but they do give some remedy to mitigate ongoing potential losses.
At THD, we pay close attention to market reports for this very reason. Limit moves are most frequently caused by the release of reports. The timing of these reports is, for the most part, known in advance. The best sourse for these reports, that I know of, is from the USDA. The website for the USDA reports is:
Forex factory has spoiled us as far as ranking the reports for us by color. I do not know of any place that does nearly as effective of job as Forex Factory in regard to the AG markets.
If you know of some report websites better than the USDA feel free to email us using the Contact form.