On January 8, KCBT members voted to approve changes to the wheat futures contract upon the recommendation of the Wheat Contract Committee and then submitted the changes to the Commission for approval.
One portion of the change mandates that No. 3 hard red winter wheat warehouse receipts delivered in satisfaction of futures contracts to the Clearing Corporation and registered with the Board of Trade must contain no more than 5 percent wheat of other classes.
The amendments to the rules are effective with the July 2003 wheat futures contract month. Any person establishing a position in the July 2003 wheat futures contract month or beyond does so according to the amended rules and any economic decision made in establishing such a position should be done with that understanding.
The amendment also allows for replacement receipts (during the time period of one business day prior to the first intention day of the July 2003 wheat futures contract month to three business days following the first intention day) reflecting the maximum 5 percent wheat of other classes. The issuing warehouse must comply with the request and may charge the receipt holder a maximum of 5 cents per bushel to issue replacement receipts.
Discounts for No. 3 hard red winter wheat have been changed from 3 cents per bushel under contract price to 5 cents under contract price. Also, deliveries made in Hutchinson, Kansas have been changed to a discount of 9 cents per bushel under the contract price as opposed to the previous discount of 12 cents.
"The Kansas City Board of Trade and its wheat contract committee diligently reviews the wheat contract periodically in efforts to further enhance the viability of the contract," said Greg Edelblute, KCBT Chairman. "These changes in the wheat futures contract should allow for the best possible convergence between the cash and futures markets at the delivery point and further enhance the viability of a contract which has had several years of record trading volume. All market participants should benefit from the increase in convergence."
The Kansas City Board of Trade, chartered in 1876, is the world's largest futures market for hard red winter wheat.
