WASHINGTON — The National Grain and Feed Association has advocated quickly adopting a variable storage rate concept as "the next logical step" in efforts to reestablish convergence of cash and futures values. The N.G.F.A. offered its view in a presentation Oct. 29 before the Commodity Futures Trading Commission advisory committee meeting in Washington. The association suggested implementation of the changes with the December 2009 contract and warned that the variable storage rate concept will take time to have its desired effect. Matt Bruns, vice-chairman of the N.G.F.A. risk management committee, argued against waiting until September 2010 as advocated by the CME Group. Mr. Bruns is vice-president of exports for Archer Daniels Midland Co., Decatur, Ill. Under the variable storage rate concept, storage charges assessed by grain elevators approved for delivery against wheat future contracts would expand or contract based on the carrying charges in the market implied by futures markets spreads. If an increase in storage rates is triggered, it would make it more costly to continue to hold or roll futures market positions forward, which the N.G.F.A. said has contributed to the significant gap between futures and cash market values. The maximum that storage rates could increase under the proposal would be about 3c per bu per contract month.
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