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Corn futures continue to be volatile

According to an agricultural agronomist at the University of Nebraska, corn futures are likely to reach the $6.00 (US) per bushel mark through the week of April 14th, however, considerable volatility in the market is likely to continue.

April 15, 2008  By MarketMaxx

April 15, 2008

Corn futures will likely teeter around $6.00 per bushel again this week. But don’t be surprised if it’s 50 cents above or below that. Markets continue to be that volatile. Darrel Mark, University of Nebraska agricultural economist, points out that due to the frequency of the grain futures markets being bid limit higher or limited down for several days at a time, the daily price limit on corn has been increased to 30 cents per bushel, up from 20 cents, and soybeans were increased from 50 cents to 70 cents per bushel.

It prevents traders from entering and exiting positions. "Further, these limits can be expanded to 150 percent in a trading session following a session when the price of two or more futures contracts traded to limit higher or lower," says Mark. The wild trading has caused some large and small grain elevators to disallow distant cash forward contracting because of the increase in margin financing requirements. "Because grain producers, who also need to avoid the futures market for similar reasons, no longer have these cash contracting alternatives, they are left with significant risks that they cannot easily offset."



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