CME Group Launches Sorghum Basis Futures Contract for Price Risk Management
CME Group has launched a new sorghum basis futures contract on the Chicago Board of Trade, designed to help producers and market participants hedge the price spread between sorghum and corn.
The contract is priced directly as a differential to corn futures, allowing market participants to isolate and manage specific structural risks while bypassing flat-price liquidity hurdles.
The new 5,000-bushel sorghum basis contract requires physical delivery of grain via truck or rail from a network of elevators located across Kansas, the nation’s largest sorghum-producing state.
John Ricci, managing director and global head of agricultural products at CME Group, stated that the sorghum-to-corn cash spread has recently swung between sharp premiums and steep discounts.