Comment Text:
I want to submit my support for what I’ve heard from various industry professionals as something similar to the VSR system that was implemented for both Chicago and Kansas City wheat futures. We are happy to see the CME raise the storage rates but are also concerned based on discussions with our peers in the industry that the raised rates alone may not help solve the lack of convergence in corn and beans over the years. We support recommendations by industry professionals noted by others who have commented for both corn and beans to have a system that sets a one year observation period for new crop corn and bean spreads. Storage rates would have the ability to increase or decrease depending on certain observation time frames and trigger points reached. Some of the ideas mentioned include adjusting storage 5 cents higher should those spreads average 80% of full carry and the revert back to 8 cents per month if during the observation period the spreads would narrow back to 50% or less. The hybrid VSR if you will would make it simple for all to understand – comparing to the wheat VSR. The flexibility in the hybrid VSR would also provide the flexibility that the market needs to adjust storage rates automatically allowing the system to more quickly react and make needed changes to help provide more consistent convergence. As a farmer owned coop, improving convergence is not only important for the elevator side of our business, but also for our producer owners.
