"We are pleased to announce the positive findings of the Sparks study. They confirm what we have believed since we began development of these cash-settled contracts," said Kent Horsager, MGEX president and chief executive officer.
Comparisons completed by Sparks indicate that hedge effectiveness of the new contracts will be at least as good as the delivery-based corn and soybeans contracts traded on the Chicago Board of Trade (CBOT). For details, please see the attached correlation charts.
The new contracts will be the first U.S. cash-settled futures and options for grains and oilseeds. The settlement indexes are based on roughly 1,500 country elevator bids and are calculated daily by Data Transmission Network (DTN), an Omaha-based electronic commerce and information services company.
The indexes are calculated to reflect the cash market that they represent and there is a broad spectrum of cash market participants. This ensures there is no possibility of index manipulation by market participants. For instance, the single largest owners of reported bids for corn and soybeans represent 3.3% and 3.6% of the index, respectively. In addition, 18% of corn bids and 19% of soybean bids come from Iowa elevators, and elevators in seven states provide 75%-80% of the total bids.
The Sparks Commodities study, in its entirety, will be available at www.mgex.com, beginning December 3, 2001 in the corn and soybeans sections. In addition, other resources for NCI and NSI contracts are posted on MGEX's Web site, including a Frequently Asked Questions (FAQ) sheet, contract specifications, a spreadsheet containing historical NCI and NSI values.
The Minneapolis Grain Exchange, established in 1881, is the only futures market for hard red spring wheat, white wheat, durum wheat, cottonseed, Twin Cities on- and off-peak electricity, black tiger shrimp and white shrimp. For more information on the Exchange, visit www.mgex.com.
