Sorghum Basis Futures Coming to CME Group on Aug 24

CME Group is set to introduce sorghum basis futures on August 24, pending regulatory approval. This move reflects the growing demand for sorghum as a versatile commodity in various industries such as animal feed, international exports, and biofuels.

The new contract will be physically delivered from Kansas, the largest sorghum-producing state, through the established Kansas City Hard Red Winter Wheat delivery network.

The sorghum-to-corn cash spread has been experiencing volatility in recent years, with prices swinging between sharp premiums and steep discounts. According to John Ricci, managing director and global head of agricultural products for CME Group, 'the sorghum futures contract will provide market participants a precise instrument to hedge that basis risk.'

CME Group achieved record quarterly volume of 2.1 million contracts for agricultural products in the second quarter of this year, with corn futures and options reaching record open interest of 4.1 million contracts.