US trading revamp ‘driving sell-off in ag futures’
US rules to curb speculation in commodity markets may have fuelled the sell-off in crop markets which drove soybean futures below $15 a bushel for the first time since July, and driven corn futures $1 a bushel below record highs.
Mike O’Dea, senior risk management consultant at FCStone, and one of the leading market commentators, urged agricultural commodity investors to become versed in the smallprint of the US Dodd-Frank trading reforms, after market rumour blamed them for accelerating the sell-off in crop futures.
FCStone had received “a lot of” comments from investors that the Dodd-Frank revamp was encouraging liquidation which saw soybean futures on Monday drop to a three-month low.
“Dodd-Frank is going to have a lot of effect on the futures market,” Mr O’Dea told a grains conference in London, even as futures revived on Tuesday, with corn standing up 0.9% at $7.43 ¾ a bushel at 06:30 Chicago time (12:30 UK time).
Wheat for December was 0.8% higher at $8.54 ¾ a bushel, and soybeans for November up 0.5% at $15.00 ¼ a bushel.