CME Group Mulling Changes to Corn and Soy Contracts

 

CME Group is mulling potential changes to corn and soybean markets to address concerns the contracts’ prices are not accurately reflecting the underlying U.S. cash grain markets. Reuters reports that CME Group says it is “only in listening mode,” and that no changes are permanent. CME Group has been talking with customers about potential adjustments, as the discussions signal a new way in which the oversupply has been affecting day-to-day operations in the U.S. farm sector. Reuters says that farmers who rely on CBOT futures are beginning to lose faith in a critical hedging tool to offset the risk of raising crops and defend themselves against price swings.

At issue for CME is a discount for corn and soybeans in the U.S. cash markets, where farmers sell their physical harvests, relative to the company’s soybean and corn futures contracts. Normally, the global futures benchmarks come together with cash prices at delivery points along the Illinois River when the futures contracts are expiring. But, some have not in recent months.