Comment Text:
I think its in the best interest of the CFTC to strongly urge the CME to reconsider the plan for a storage rate change.
Taking 3 years to review and possibly have change in a storage rate is way to much time to "fix" convergence. Think about the time lapse from lack of convergence today and 3 crop cycles before there could be a "fix". A much more timely process would be a yearly "review".
When we have lack of convergence it hinders the confidence in the hedging model and the contract. Not only to grain merchants but to money lenders as well. The unintended consequences of lack of convergence also plays a major role in crop insurance indemnity payments.
Having a variable storage rate on wheat and not on corn and soybeans sure give the ware-houseman incentives to store wheat and move soybeans and corn at less than convergence values. Now if the CME has their way corn and soybeans will have a new storage rate only it takes 3 years for a change vs the wheat gets looked at every delivery period.
VSR has shown itself to be a nearby fix, however a 3 year observation period is not fixing the problem. Please ask CME to review.
