Cargill, Bunge Want Further Changes To CBOT Wheat Contract
Major grain players including Cargill and Bunge continue to say that the Chicago Board of Trade needs to improve on a plan to narrow a gap between wheat futures and
cash prices.
"We have serious concerns that the steps taken will not effectively address and correct the problem," Cargill said in a statement submitted to the CFTC.
Both company's are unhappy about the continued divergence between CBOT futures and cash prices.
The difference has been $2 a bushel or more in recent weeks, with futures trading at around $6 a bushel this week and cash prices quoted near $4 at some locations.
The CME Group, which owns the CBOT, proposed several changes last month to the wheat contracts specifications, designed they say, to improve convergence. The changes included tinkering with storage charges and contract specifications, but did little to flush out spec long-holders.
Bunge agreed saying that "these changes alone are not likely to achieve the convergence sought by many commercial market participants."
It is of course no surprise that the CME want as much spec money in the market as possible. What is surprising is that futures and cash prices of US wheat seem to refuse to converge despite so many spec longs exiting the markets in recent weeks.
cash prices.
"We have serious concerns that the steps taken will not effectively address and correct the problem," Cargill said in a statement submitted to the CFTC.
Both company's are unhappy about the continued divergence between CBOT futures and cash prices.
The difference has been $2 a bushel or more in recent weeks, with futures trading at around $6 a bushel this week and cash prices quoted near $4 at some locations.
The CME Group, which owns the CBOT, proposed several changes last month to the wheat contracts specifications, designed they say, to improve convergence. The changes included tinkering with storage charges and contract specifications, but did little to flush out spec long-holders.
Bunge agreed saying that "these changes alone are not likely to achieve the convergence sought by many commercial market participants."
It is of course no surprise that the CME want as much spec money in the market as possible. What is surprising is that futures and cash prices of US wheat seem to refuse to converge despite so many spec longs exiting the markets in recent weeks.
