Limit up and limit down are the maximum amounts that a commodity future can gain (limit up) or lose (limit down) in a single trading day.
They are used to protect futures contracts from unexpected events that could cause significant price changes in the underlying commodity. Without a limit up or limit down, there is a risk that the price of a futures contract will reach an irrational level due to market panic.
Limit ups and limit downs can cause a difference between the price of a market and the price reflected in its corresponding futures contract. If a market makes a significant move in a short period of time, the contract price may reach its limit up or limit down for several days before matching the market's price.