ICE Contemplates Emergency Position Limits In Cotton After Yet Another Limit Up Lock

Tyler Durden's picture

You don't go up 28% in one month on free and endless Bernanke Bux without the ICE slapping your hand. Sure enough:

ICE Futures U.S.®, Inc. (“Exchange”) is contemplating taking the following action effective with the March 2011 Cotton No. 2® futures contract. Cotton market participants who expect to carry positions in excess of the spot month position limit, 300  contracts, into the notice period would be required to file an exemption request form with the Market Surveillance Department. To be eligible for a notice period exemption under Exchange Rule 6.26 (Hedge Exemption), applicants would request a specific long or short position sufficient to cover the applicant’s bona fide hedging requirements for the contract month’s delivery month and the  next succeeding calendar month.

Information would be provided to demonstrate that the requested position limit was economically appropriate to the reduction of risks arising from the potential change in the value of the assets owned by the applicant such as inventories and fixed price physical purchases or liabilities owed such as fixed price physical sales.

An exemption request would have to be approved by the Exchange in order for a market participant to carry a Cotton No. 2® futures position in excess of the 300 contract spot month speculative position limit into the Notice Period. Pursuant to Rule 6.26, exemption requests would have to be received by the Exchange no later than five (5) business days prior to the first notice day of the contract month. Thus, exemption requests for the March 2011 notice period would have to be submitted by February 14,  2011. Any exemptions granted would be for a specified contract month only and should not be viewed as relief from the responsibilities all traders have to transact their business in a manner consistent with an orderly market.

Exemption request forms may be obtained by contacting the Market Surveillance Department (212-748-4031 or

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Josephine29's picture

I guess this feeds in with the analysis I was reading earlier.

Commodity prices have continued their recent rises with the CRB spot index up a further 1.77 to 558.28 yesterday which is yet another recent high. If we take a look at the foodstuffs component it has now risen to 487.6. So those struggling to feed themselves in Egypt will find that the problem is getting worse as this latest surge in food prices which started in late November came from 400 on the foodstuffs index giving us a rise now of just under 22%.

Captain Benny's picture

Silver 100 oz bars are no longer acquirable for immediate delivery retail... anywhere. (Except maybe Tulving)

youngman's picture

There is plenty of paper 100oz bars available....and I think that is all that is trading.....shortage of the real stuff...but the price is going down....HFT´s that is all....

Larry Darrell's picture

How many shorts will the Morgue put on cotton? hahaha

Those who are 100% certain things can be controlled are running out of room.

Paint, meet corner.

Cash_is_Trash's picture

Bureaucrats, meet mob violence.

Larry Darrell's picture

I don't know how much longer they have, but with 43.6 million on food assistance it won't be pretty.

The past 2 years has been like watching a slow burn of a really long fuse, and the whole time they have been piling more and more explosives on the pile to which it is headed.

Sophist Economicus's picture

Limit-Up Bitchez!

Stupid I know, couldn't resist



RobotTrader's picture

With gold getting the beat down again this morning, at least they don't have to worry about limits on the PM's.

I wonder what sensationalist headline is going to appear next on King World News???

Seems like there is a new one every day.

SheepDog-One's picture

I wish there was a sensationalist headline saying- RainbowTrader Mysteriously Vanishes from Zerohedge Forum.

william the bastard's picture

You lose $3-4 a day it adds up. You will start feeling like proverbial frog in slowly boiling water

SheepDog-One's picture

Who says Im losing anything? However, your stocks one day will lose 50% before you can hit a sell button, only morons believe 'this time its different'.

Pegasus Muse's picture

"You lose $3-4 a day it adds up."

Not me.  I don't own solar stocks.   

tmosley's picture

Oh noes paper gold is down 0.34%!  Those guys calling for higher gold prices since 2000 must have been totally wrong!

What is with your obsession with King World News?  You stink of fear, boy.

SheepDog-One's picture

You do stink of fear and desperation Rainbow.

StychoKiller's picture

Look at the timestamp on my post:  Gold @$1353+, Silver @$28+


ak_khanna's picture

The primary thing driving up commodity prices worldwide are speculators armed with cheap money provided by central bankers and super fast computers. This is causing a havoc in the lives of rest of the population and pushing them towards poverty as they can no longer afford the basic necessities of life.

Regulators are either hand in glove with the banksters or are too slow to react and take ages to identify and take measures to solve the problems.

Total ban on speculation and the reinforcement of Glass Steagall Act is strictly required to bring relief to the man on the street.

SheepDog-One's picture

Well, thats certainly true but there are actual shortages in these commodities as well.

tmosley's picture

Exactly.  A ban on "speculation" will ensure that any shortages become permanent, and that any commodity experiencing a shortage won't be available at any price, save perhaps on a black market.

We don't need "bans on individual action" or new dumbshit laws.  We need to end the Fed.

william the bastard's picture

You'll need 20 years to get back to $1300 after the FRB ends QE.

tmosley's picture

Yes, but not from the direction you are thinking.

Congratulations!  That was, officially, the weakest troll post of ALL TIME!

What does he win, Johnny?

StychoKiller's picture

How about a crack upside the head with a 100Toz Silver bar? :>D

MachoMan's picture

Those people who merely hedge their productivity with precious metals will have no problem what so ever taking a massive hit to their stockpile if it means their productivity will actually be financially viable for the forseeable future.

SheepDog-One's picture

Exactly, we need to ban the FED. NO excuse the USA today is not as it was 20 years ago, producing all we could use and still #1 exporter to the world for most all of it. The FED has screwed us sideways!

Cash_is_Trash's picture

Let us expand the current theatre to the 'War on Speculation'

william the bastard's picture

Preposterous. Won't happen. BS Dreaming.

tmosley's picture

You really are the queen of DeNile, aren't you?

EscapeKey's picture

That is brand new information!!!eleventyone

Seriously, how many copypasta muppets do we need here?

Drag Racer's picture

'Turn those machines back on'

RobotTrader's picture

The best thing that the gold bugs could wish for is to eliminate all margin from gold and silver contracts.

Cash buyers only.

That would permanently remove all the overleveraged, over-margined CIGA and GATA boys out of the futures market for good and reduce the volatility.

Then, you could see gold go up based on strong, all-cash buyers.

Not these bit-flipping, F12 - punching, hysterical GLD traders that swarm the gold markets like locusts who are all trying to get rich after reading outlandish predictions on jsmineset and King World News.

tmosley's picture

Where did you get the idiotic idea that anyone at GATA or any of these other organizations was using margin?  Only dumbshits like you use margin.  These guys have been buying gold for a decade.  

You, on the other hand, have been repeatedly bankrupting yourself and your family, and imposing an enormous burden on your mother by moving into her basement and eating all of her Spam and Cheez-whiz.

Christ you are such a jealous little loser.

eigenvalue's picture

To be honest, I think the information provided King World News is quite reliable. I just read about the strong demand for gold in China and that's exactly what's happening now. I'm in China at the moment. If you order gold bars today, you can only get the delivery after waiting for 3 months. 

SheepDog-One's picture

OH right, now heres Rainbow acting as special counsel to gold buyers, showin em how to do it right. Youre all wet behind the ears Rainbow.

william the bastard's picture

The only question is how low do prices have to go to attract buying interest again?

yellowbr's picture

Dude, real guys trade options, you know, December 1800 C's.

asteroids's picture

Do that for oil and every other commodity and you've got a deal.

eigenvalue's picture

Guess most of the people here haven't studied much about the fundamentals of cotton. The fundamentals of cotton is extremely strong. The surge of the cotton price is because of the internal problem of China, the biggest cotton producer in the world. The production in the US, the third largest producer, is half the size. Planting cotton is extremely unprofitable in China even at the current price. People would rather work in sweatshops because they can earn more. The Bernank does play a part in it but he shouldn't be blamed for everything. 

SheepDog-One's picture

'The fundamentals of cotton are extremely strong, and with the high price, that means its very unprofitable for China to produce any cotton so people would rather just work in sweat shops because given a choice between cotton farming and a sweat shop job, Chinese far prefer a sweat shop, more profitable'.

Wow kooky post man!

eigenvalue's picture

Have you ever visited any village in China? Guess not. I have and I have done it several times. Nowadays, it's the middle-aged and old people in China doing the farming. It's extremely unprofitable but they just love this job and love the land. But young people don't have such love for being a farmer. They want higher pay and better life so they work in sweatshops where they can earn more money. Growing cotton is very labour-intensive. You can imagine what will happen when those middle-aged and old Chinese farmers can't work any more. 

eigenvalue's picture

What I mentioned was "even at the current price". Of course, there will be a price level when growing cotton is more profitable than working in sweatshops. Then the young labour will come back to cotton field again.

Dixie Normous's picture

Back when India started fucking around with export freezes last year, cotton futures become a laughable tool to exacerbate a shortage that amounted to about 1 million bales worldwide.

There are fundamentals involved here, but the doubling of the price in 3 or 4 months is definately brought on by a pump crowd.

I've watched the cotton futures in the overnight session and seen them go staight up on no volume, regardless of spread, just lifting every offer, it's a fucked up market and it's being treated like shares of NFLX, except it only trades in the thousands of contracts per day, not millions.

eigenvalue's picture

China also has cotton futures traded, which are much more liquid than ICE ones. The monetary policy in China is very loose. Lots of people are borrowing money and stocking cotton. The strong export of US cotton is related to the speculative stocking in China to some extent.

SheepDog-One's picture

No the stocks are rising due to FED intervention nightly, commodities are rising fast because Bernank is Biblically flooding the earth with trillions in worthless fiat FRN's.

william the bastard's picture

a chance to turn up the Price
Oscillator and refusing to take it
is a message that gold is just not
ready yet to head higher. In
addition, the intraday high on
Wednesday was a touch of the
declining tops line, which is a
great place for a tepid rally to
fail if indeed gold is still headed