Comment Text:
The grain industry is in desperate need of improving the current out-dated delivery system. Storage rates must be able to change with fluctuating market conditions in a timely fashion to work properly. It must be dynamic to market conditions and influences and not politics like the current system. Current changes are taking too long to implement (3 yrs), so convergence is not timely to influences. A lack of convergence does not represent the market conditions and is unfair to all while unfairly benefiting large companies that can more easily offset risks.
We support recently suggested VSR to the current out-dated Delivery system by using a hybrid with one yearly observation period that would create less complexity and uncertainty about what full carry is and how it is affected by changing market conditions. This hybrid is flexible and does NOT rely on the CME focus groups and applies where open interest is significant.
We like utilizing current VSR at 80% of full carry to provide a monthly deliverable storage increase of 5c, and 50% of full carry to provide a monthly deliverable storage decrease of 5c (not to decrease below the 8c monthly base rate).
Adopting CZ/CH and SX/SF for annual observation periods as new crop value of storage should be known and adopted.
