KCBOT addresses wheat futures issues
On a vote of 115-36, the members of the Kansas City Board of Trade Tuesday adopted a series of measures to address the lack of convergence between the KCBT’s Hard Red Winter Wheat futures contract and cash prices received by farmers. According to the KCBT, the proposals approved will do the following:
- increase the base storage rate from 4.5 cents per bushel per month to 6 cents per bushel per month during the calendar months of December through June;
- add a “harvest storage premium” in calendar months July through November of 3 cents per bushel per month; and
- require payment for storage on the first calendar day of each delivery month, with payment through Aug. 31, 2011, due before the changes go into effect on Sept. 1, 2011.
The changes will also affect protein levels accepted for KCBT wheat contracts. Starting with the September 2011 futures contract, hard red winter (HRW) delivered must contain a minimum of 11 percent protein, with a 10 cent discount for levels between 10.5% and 11%. Protein levels less than 10.5% would not be deliverable. The new KCBT contract specifications will also carry a vomitoxin restriction of two parts per million (ppm), down from four ppm. The changes must still be approved by the Commodity Futures Trading Commission.