Comment Text:
The lack of convergence in both corn and soy contracts has hindered the entire grain industry for the last few years, making "true" hedging a greater challenge. I support increasing the monthly storage rates and using a VSR type approach similar to what is currently used in the wheat market. Instead of using of wheat's contract by contract VSR determination, I would encourage an observation period to determine if the monthly storage rates would need to be increased or decreased. Dec/Mar spread in the corn and Nov/Jan spread in the beans has been the suggested spreads to use for this determination; I would fully support using these two spreads.
The lack of convergence does not help our farmers neither, as their crop insurance indemnity is based off the futures price rather than their local cash price. They are also the victims of lower bids due to non-convergence.
I applaud CME's recognition of the issues faced with non-converging markets. However, I believe using a modified VSR approach using the spreads suggested above through a known observation period to determine if storage rates need to be increased/decreased would make our markets more efficient and transparent again.
Thank you.
