CME Launches Sorghum Basis Futures to Hedge Risk as Delivery Sites Draw Industry Debate
Updated
Updated · brownfieldagnews.com · Aug 24
CME Launches Sorghum Basis Futures to Hedge Risk as Delivery Sites Draw Industry Debate
3 articles · Updated · brownfieldagnews.com · Aug 24
Summary
Sorghum basis futures have started trading on the Chicago Mercantile Exchange, adding a new contract aimed at improving pricing in a market that has faced thin cash bids.
Guy Allen of Kansas State University said the contract should strengthen price transparency and discovery, especially after some country elevators posted no bids during recent harvest periods.
National Sorghum Producers have raised concerns about delivery locations, but Allen argued futures delivery points do not need to sit next to production areas to work effectively.
CME said the product has broad industry support for hedging basis risk, while Allen said the listed locations could also improve access to export channels including the Texas Gulf, Mexico and the Pacific Northwest.