May 19, 2011

Agricultural Advisory 

Committee

U.S. Commodity Futures Trading Commission

David J. Amato, Director

Agricultural Contracts Market Surveillance Branch 
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Dollars per Bushel 

Cotton in Cents per Pound

CBT Wheat

MGEX 

Wheat

Corn

Soybeans

KCBT Wheat

Rice ($/cwt)

All-Time Record High

Nearby Futures Price

MGEX Wheat $25.00 on 2/25/08

KCBOT Wheat $13.70 on 2/27/08

CBOT Wheat $13.345 on 2/27/08

Rice $24.685 on 4/24/08

Soybeans $16.63 on 7/3/08 

Corn $7.8375 on 4/11/11

Oats $4.5975 on 7/3/08

Cotton $2.27 on 3/7/11

Oats

Source: FutureSource

Cotton

Major U.S. Agricultural Futures Prices 

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Corn Historical Volatility in April

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Crop Planting Progress and Conditions

Planting Progress Last Week 5-Yr. Average

Corn 63%

(East CB 35%; West CB 85%)

75%

Soybeans 22% 31%

Rice 69% 83%

Spring Wheat 36% 76%

Oats 69% 91%

Crop Condition Last Week 5-Yr. Average

Winter Wheat Poor/Fair 45%

Good/Ex. 32%

8%

68%

Range and Pasture Poor/Fair 22%

Good/Ex. 48%

9%

64%

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Bonnet Carré

Morganza Spillway ●

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Bird’s Point Levee

Mississippi Watershed

─ ─ Natchez, MS
A. Barges are not allowed to move south of Natchez, MS. No grain 

vessel loading for awhile. Could cost 10s of millions of $ per day.

B. Farm Bureau estimates 2 million acres of farm land in Arkansas, 

Tennessee, and Mississippi flooded or under flood threat. 

C. Arkansas rice acreage loss near 300,000 acres (21% AR, 10% US 

acres); loss of $300 million in rice production. 

D. Between Arkansas, Louisiana and Missouri, a potential 40% 

reduction from last year’s planted rice acreage.

E. Arkansas Winter Wheat: 120,000 acres of 550,000 planted will be 

abandoned

F. Arkansas Cotton: reduced yield losses projected at $66 million

G. As Morganza Spillway is opened - 3 million acres will be flooded

Initial Agricultural Impact

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Flooding Impact on CBOT Wheat Load-out

CME Special Executive Report S-5742 May 2, 2011

Flooding on the Mississippi and Ohio Rivers

Due to recent weather and flooding along the river system, a 

majority of the shipping stations on the Mississippi River, Ohio 

River and St. Louis area are not able to load barges for wheat at 

this time. 

Excerpt from CBOT Rule 703.C.G(8) If the aforementioned 

condition of impossibility prevails at a majority of regular 

shipping stations, then shipment may be delayed for the 

number of days that such impossibility prevails at a majority 

of regular shipping stations.

• If load-out is requested, maker and taker may negotiate 

acceptable alternatives.
Convergence Overview

A. What does the CFTC mean by Convergence?

B. Convergence is core to the mission of the CFTC. 

C. Convergence problems alert the regulators to 

contract specification issues.

D. Basis tends to deteriorate at Calendar Spread 

Full carry.

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Side-Effects of Poor Convergence

A. Price Discovery Weakened

B. Hedge Effectiveness Hampered

C. Potential for Market Manipulation

D. Forward Contracting Reduced 

E. Agriculture Lending Credit Crunch

F. Crop Insurance Program Problems

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Recent & Upcoming Contract Amendments

CBOT WHEAT

July 2009: expand delivery territory, quality specs, and storage rate.

September 2009: vomitoxin of 3 ppm for par delivery.

July 2010: Variable Storage Rate mechanism implemented.

September 2011: vomitoxin of 2 ppm for par delivery.

KCBT WHEAT

September 2011

• increase the base storage rate 30% to 6 cents

• institute a harvest premium storage rate of 9 cents

• require monthly payment of storage

• establish a par protein level of 11% (10.5% deliverable at a discount)

• tighten specifications on vomitoxin

CBOT RICE

September 2011: fix milling yield differentials to % of loan rate

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CBOT SRW WHEAT CONVERGENCE

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KCBOT HRW WHEAT CONVERGENCE

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CBOT ROUGH RICE CONVERGENCE

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