Iowa Secretary of Agriculture Bill Northey made comments to the Commodity Futures Trading Commission that expressed his concern with a proposal to increase daily price limits on corn futures trading. Northey said the proposal could expose farmers to increased volatility and increased margin calls as they seek to exercise risk management. Northey notes that although corn prices are currently high, it wasn't that long ago (July, August 2010) that corn futures traded under four dollars. Northey expressed concern that the proposal is “creating a permanent solution to what may be a temporary situation” and says that the current high price levels should be sustained for a much longer time period, before raising the price limits would be justified. The proposal would increase the daily price limit for corn contracts from 30 cents per bushel to 50 cents per bushel. Northey stated that, "For most participants, this proposal runs counter to the basic premise of using the futures markets to reduce risk." The entire text of Northey's statements can be reviewed here at the Iowa Department of Agriculture & Land Stewardship website.
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