Market Matters Blog

CME Group New Speculative Position Limits Go Into Effect March 15

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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The CME Group will increase both spot-month and all-months-combined speculative position limits effective Monday, March 15. (DTN/Progressive Farmer file photo by Jim Patrico)

On Jan. 27, 2021, the CME Group notified the Commodity Futures Trading Commission (CFTC) that it intended to increase both spot-month and all-months-combined speculative position limits, effective March 15, 2021.

On Jan. 28, the CME released a market surveillance notice, outlining the changes, and then, on March 1, they issued a revised market surveillance notice that superseded the Jan. 28 notice. https://www.cmegroup.com/…

In a Jan. 29 news release, the National Grain and Feed Association (NGFA) noted that the change is intended to coincide with the effective date of CFTC's final rule that revises speculative position limits for corn, wheat, soybeans and other agricultural commodities, and imposes such limits on some energy, metals and financial futures contracts for the first time.

"In something of a surprise move, CME proposed to increase all-months-combined limits, derived by formula based upon open interest levels for corn, wheat, soybeans and other agricultural commodities, to the new maximum federal limits finalized by CFTC," NGFA said. "In some cases, that would result in very large increases from current levels. For example, the all-months-combined limit for corn would increase from 33,000 contracts to 57,800; CBOT wheat would increase from 12,000 contracts to 19,300; and soybeans would increase from 15,000 contracts to 27,300. Other commodities like soybean meal and oil also would see very large increases."

DTN Lead Analyst Todd Hultman said: "Overall, increased speculative participation in the market makes prices more volatile, more susceptible to manipulative games that have nothing to do with supply and demand. For farmers, the cost of having more speculators in the market is that prices get pushed lower than they normally would when grain supplies are plentiful."

The CFTC approved the final rule on Oct. 15, 2021, completing one of the last unfinished pieces of regulatory business to implement under the 2008 Dodd-Frank Act, noted the NGFA. The vote split along party lines, with Republican Chairman Heath Tarbert and Commissioners Brian Quintenz and Dawn Stump in favor, and Democratic Commissioners Russ Behnam and Dan Berkovitz opposed after stating objections to issues unrelated to agricultural provisions of the rule.

Here is a more in-depth look at the Oct. 15 final rule from an Oct. 16 news story by DTN Staff Reporter Todd Neeley: https://www.dtnpf.com/….

On Jan. 14, 2021, after a 10-year process and after several false starts, CFTC published its 258-page final rule on speculative position limits in the Federal Register. Here is a link to the CFTC final rule on speculative position limits in the Federal Register: https://www.govinfo.gov/….

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

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