CME Group's Sorghum Basis Futures Plan Sparks Controversy Among Agricultural Groups

The CME Group announced that it will start trading sorghum basis futures on August 24, but the move has sparked mixed reactions from agricultural groups. Kansas State University ag economist Guy Allen believes the contract will help reduce basis volatility and increase price transparency for end-users such as feedlots and domestic ethanol producers.

However, National Sorghum Producers Chairwoman Amy France expressed concerns that growers were not involved in the development of the contract. She noted that delivery locations are a major issue, with only eastern Kansas included in the initial plan.

The CME Group plans to deliver the contracts through a network of elevators in Kansas using the Kansas City Hard Red Winter Wheat delivery network by truck or rail.