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U.S. wheat farmers are losing confidence in using CME Kansas City wheat futures to hedge, after the last three expiring HRW contracts went off the board with cash prices 25 percent or more below futures at delivery locations. Elevator storage at capacity and a 6 to 9 cent per bushel storage rate are cited as causes, with a doubling of storage rates or a variable storage rate under discussion.
A broken HRW contract weakens price discovery and hedging for buyers and exporters, and widening basis at delivery points keeps cash HRW prices pressured relative to futures. Storage fixes could tighten the basis over time.
hppr.orgHigh Plains Public Radio, Angie HaflichDec 27, 2016Not enough comparable past events yet for a historical read.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
