Comment Text:
Run an observation period for Dec/March corn the same way you would VSR in wheat today.
Start a weighted average based on the Dec/Mar spread close, beginning at the expiration of the Sept contract and running through expiration of Dec options. If the spread averages above 80% of full carry, storage would increase from 8 cents/mo to something higher (say 11 or 12cents/mo) for the subsequent year. Otherwise it would remain at 8 cents/mo. The same exercise could be run during that time frame each year.
Applying this so-called hybrid approach would allow the market to determine what storage is worth on an annual basis based off cash market conditions, ultimately creating a more
dynamic marketplace and more consistent convergence.
Thank you
