N.G.F.A. remains concerned about wheat contract
October 03, 2008
by Josh Sosland
WASHINGTON — In an Oct. 2 statement before the Commodity Futures Trading Commission, the National Grain and Feed Association said proposed CME Group changes to the Chicago Board of Trade wheat futures contract would not be enough to restore the contract’s utility as a pricing and risk-management tool for commercial hedgers. The proposals, not opposed by the N.G.F.A., involve establishing seasonal storage rates at designated delivery grain elevators for CBOT wheat; expanding grain elevator wheat delivery locations at market-based differentials; and setting tighter vomitoxin limits. The N.G.F.A. said the wheat contract performance has deteriorated, its integrity and functionality has declined, and "it may be at risk of failure if current trends continue." The group said a more comprehensive approach was needed to achieve convergence between futures and cash market prices for the C.B.O.T. wheat futures contract. In particular, the N.G.F.A. called for the creation, over time and following study, of "demand certificates" that would allow the maker of delivery to compel load out of the underlying commodity to satisfy futures contract obligations.