The Kansas City Board of Trade (KCBOT) Board of Directors approved on Thursday a series of measures meant to address the lack of convergence between wheat futures prices and cash prices received by farmers.
The Board considered a hybrid proposal of two recommendations from the KCBOT’s Wheat Contract Committee.
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 calendar months December to June;
- institute 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 KCBOT 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 percent and 11 percent, and wheat with levels under 10.5 percent deemed undeliverable.
The new KCBOT contract specifications will also call for a vomitoxin restriction of two parts per million (ppm), down from four ppm.
The changes must still be approved by KCBOT shareholders and the Commodity Futures Trading Commission (CFTC), which is the KCBOT’s regulator.