Market Matters Blog

On March 18, the CME Group announced the "Initial Listing of the Hard Red Spring Wheat Futures and Options on Hard Red Spring Wheat Futures Contracts, effective April 13 for trade date April 14." The first tradable month will be July 2025.

That new futures contract will trade alongside the current Minneapolis hard red spring wheat benchmark contract. MGEX has been the principal market for hard red spring wheat, offering futures and options contracts based on the HRS wheat contract, which debuted in 1883. The Minneapolis Grain Exchange (MGEX) became a subsidiary of Miami International Holdings (MIAX) after the two companies merged in 2020.

These two contracts differ in their specifications for delivery, which has traders scratching their heads over some of the delivery specs and rules in the new CBOT contract. Here are some of the CBOT specs that differ from MIAX specs:

-- U.S. No. 2 northern and dark northern spring wheat at par. U.S. No. 1 northern and dark northern at 3 cents per bushel (bu) premium.

-- Protein percentage: 13.5% at par; 13% to 13.4% at 10 cents/bu discount.

-- Falling number: 250 or better at par; 225 or better at 25 cents/bu discount; 200 or better at 50 cents/bu discount.

-- Vomitoxin: 2 parts per million or better at par; 3 parts per million or better at 20 cents/bu discount.

Here are some of the delivery specs for the MIAX spring wheat contract that differ from CBOT. The only change made recently was the addition of a new delivery station in Duluth, Minnesota:

-- USDA No. 2 or better dark northern or northern spring wheat with a protein content of 13.5% or higher, with 13% to 13.4% protein deliverable at a discount.

-- All above grades with 13% to 13.4% protein inclusive are deliverable at a 3 cents/bu discount.

-- Deliverable spring wheat may not exceed 2 parts per million (ppm) deoxynivalenol (vomitoxin) level. Vomitoxin levels of 2 ppm to 3 ppm deliverable at a discount. Levels exceeding 3 ppm will not be deliverable.

Probably the biggest difference that sticks out to traders and also to me, (after nearly 20 years trading export and milling spring wheat), is that the CBOT contract has a falling number requirement (for delivery) and MIAX does not. While milling quality wheat on the spot cash floor is 300 FN or better, 250 minimum may be accepted by some mills.

I was thinking that the new CBOT contract was more a milling contract, but then looking at the vomitoxin level in the CBOT contract versus the MIAX made me confused. I am talking about the CBOT showing a discount at 3 ppm or higher vomitoxin, while MIAX spec says "no level above 3 ppm is deliverable."

One thing the CME contract will have that MIAX contract will not is the ability to trade spreads with other CBOT contracts, given they will all share the same electronic platform.

However, the MIAX contract is currently used by USDA Agricultural Marketing Service (AMS) for the daily Minneapolis spot cash spring wheat market. In addition, the USDA currently uses the MIAX contract to determine loan prices and NASS uses it for its Agricultural Price reports.

As of now, the MIAX contract will remain on the CME platform until June, allowing us to watch them "side by side."

Bottom line: Having two spring wheat contracts is not sustainable, in my opinion, as well as the opinions of other traders I spoke to. So, we watch and wait to see what happens next.

Here is a link to the MIAX HRS rules/delivery specs in chapter 50.1.16. page 108: https://www.miaxglobal.com/…

Here is a quick view of the specs for the MIAX HRS contract: https://www.miaxglobal.com/…

Here is the link to the specs for the CBOT HRS contract: https://www.cmegroup.com/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

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