The Kansas City Board of Trade’s Wheat Contract Committee has implemented, subject to CFTC approval, a vomitoxin (deoxynivalenol) restriction effective immediately (July 1, 2008) in order to ensure that deliveries of Hard Red Winter wheat in satisfaction of futures contracts do not contain unreasonable levels of vomitoxin.
The Wheat Contract Committee recently held meetings in response to reports in the Hard Red Winter wheat growing region of fields where the fungal disease “scab” has been reported. Since fields infected with scab may also contain vomitoxin, the committee decided to preemptively and proactively institute the restriction, in a special meeting held on June 26, 2008.
Rarely is vomitoxin prevalent in HRW wheat, and it is still too early in the HRW wheat harvest to determine whether there will be any significant amounts of vomitoxin in the year’s crop. However, the unusual weather patterns this year prior to harvest, specifically significant amounts of moisture received at a critical time in plant development, have resulted in areas where the possibility for vomitoxin exists.
Because vomitoxin is not normally an issue associated with HRW wheat, the committee was concerned that vomitoxin wheat making its way into the delivery system could have an impact on the pricing of KCBT wheat futures, given that millers and exporters do not accept HRW wheat with vomitoxin levels higher than 2 ppm (parts per million) in normal domestic and export contracts.
Although the amount (if any) of vomitoxin in this year’s wheat crop is undeterminable at this time, the committee determined that the mere possibility of unacceptable levels of vomitoxin making its way into the delivery mechanism is sufficient cause to implement a restriction limiting the level of vomitoxin in delivery wheat to no more than 4 ppm.
The rule states that when warehouse receipts are surrendered to the issuer for load-out pursuant to Rule 1215.00, the taker of delivery shall have the option to, at the taker’s expense, request in the written load-out instructions that the wheat contain no more than 4 ppm of deoxynivalenol (vomitoxin). A determination of the level of vomitoxin shall be made at the point of origin by the Federal Grain Inspection Service or such other third party inspection service mutually agreeable to the maker and taker of delivery.
A determination of the level of vomitoxin shall be based on the average test results of the wheat loaded in a single day from a single warehouse for each taker of delivery. As of the effective date of this rule, any warehouse receipts previously issued and outstanding shall be subject to the provisions of this Resolution.
To read KCBT rules regarding delivery, please go to: Rule Book Chapter 12
The resolution has been submitted to the Commodity Futures Trading Commission for final approval.
The Kansas City Board of Trade, founded in 1856, is the world's largest futures market for hard red winter wheat. Daily quotes, market commentary, historical data and charting services are available on our website at www.kcbt.com.
