The Variable Storage Rate (VSR) mechanism in Chicago Board of Trade (CBOT) SRW Wheat futures examines nearby calendar spreads to determine adjustments in contract premium (storage) charges.  The March 2014 – May 2014 wheat calendar spread averaged 32.38 percent of financial full carry during the period of December 19, 2013 through February 21, 2014.  Although this result is below 50 percent of financial full carry and would normally trigger a reduction in Wheat premium charges, the current premium charge is already at the minimum allowed by the mechanism.  Thus, the maximum premium charge that a Wheat regular delivery facility may charge holders of its outstanding shipping certificates will not change from the current maximum charge of 16.5/100s of one cent per bushel per day (approximately 5 cents per bushel per month).

The next evaluation period will measure the May 2014 – July 2014 calendar spread relative to financial full carry during the period of March 19, 2013 to April 25, 2014 with the next possible adjustment to contract premium charges on May 18, 2014.  Please note that the current maximum storage rate of 16.5/100s of one cent per bushel per day is the contract minimum storage charge and a VSR calculation at or below 50 percent on the May 2014 – July 2014 spread cannot trigger a lower storage rate.

Questions may be directed to Fred Seamon in Research and Product Development (312-634-1587 or Fred.Seamon@CMEGroup.com).