The Kansas City Board of Trade has received approval from the Commodity Futures Trading Commission for revisions to its hard red winter wheat contract. On June 20, KCBT members voted to approve the changes, which were first proposed by the Wheat Contract Committee, then forwarded to the Board of Directors prior to the member vote.
“The exchange Wheat Contract Committee spent a great deal of time and effort over the last two years analyzing and discussing the subject of wheat contract rule enhancements,” said Greg Edelblute, Chairman of the Wheat Contract Committee. “Over the course of our extensive discussions, the Committee recognized that certain modifications could further enhance the wheat futures contract. The changes proposed were considered necessary given the industry’s continued consolidation, the continuing trend of railroads toward larger units, and the desire of commercial market participants to have deliverable grades on the contract that better reflect the quality of wheat handled in both domestic and international trade.”
“In connection with these changes, the Committee was careful to construct a “package” of revisions that resulted in the requisite “balance” considered by the Committee to be the most critical aspect in the consideration of any amendments to the contract. This balanced package of changes provides takers of delivery with higher quality assurances (elimination of #3 HRW and 10 IDK limitation) and the ability to load-out the wheat at a faster rate (load-out rate or cadence), while providing makers of delivery with additional locations from which to deliver and increased storage and load-out fees.”
Market participants are hereby informed that the changes are effective with the July 2008 wheat futures contract month. In that regard, any person establishing a position in the July 2008 wheat futures contract month or beyond should do so with the following understanding.
Proposed changes are as follows:
• Additional delivery points of Salina/Abilene and Wichita• Location differentials
12 cents per bushel under contract price for Salina
6 cents per bushel under contract price for Wichita
• Contract grades of No. 2 hard red winter or better
• Maximum 10 insect damaged kernels (“IDK”) per 100 grams
• Load out fee of 8 cents per bushel
• Storage of 4.5 cents per month
• Railcar load out cadence: warehouse receipted delivery wheat by warehouse
Up to 3,000,000 bushels: 30 per day/150 per week
3,005,000 to 4,000,000 bushels: 40 per day/200 per week
4,005,000 to 5,000,000 bushels: 50 per day/250 per week
Each like increment up, add 10 per day/50 per week
To view the specific rule amendments, click here: KCBT Rule Book
