Variable Storage Rates (VSR)

Variable Storage Rates (VSR) is a market-based determinant of maximum allowable storage charges for outstanding wheat shipping certificates. It triggers higher maximum allowable storage charges that allow wider spreads when spreads are near financial full carry and lower maximum allowable storage charges when spreads are narrow or inverted. Market participants may follow the daily VSR calculations during the observation period at the "VSR Calculator" link below.

Nearby spreads that average 80 percent of financial full carry or greater will trigger an increase in maximum allowable storage charges by 10/100s of one cent per bushel per day (approximately 3 cents per bushel per month) following the nearby delivery period. Conversely, nearby spreads that average 50 percent of financial full carry or less will trigger a decrease in maximum allowable storage charges by 10/100s of once cent per bushel per day following the nearby delivery period. Should nearby spreads average over 50 percent of financial full carry and less than 80 percent of financial full carry, the maximum allowable storage charges will remain the same as in the previous period. There is no upper limit for maximum allowable storage charges under VSR, but the minimum rate is 16.5/100s of one cent per bushel per day.

Wheat and Mini-Sized Wheat Futures – (No Change)

The May 2019 – July 2019 Wheat calendar spread averaged 35.49 percent of financial full carry during the period of March 19, 2019 through April 26, 2019. VSR results that fall below 50 percent of financial full carry normally trigger a reduction in the maximum premium charges. However, regular delivery facility charges for holders of outstanding shipping certificates for Chicago SRW Wheat are already at the lowest allowable rate. Therefore, the maximum premium charge that a Chicago SRW 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).

KC HRW & Mini-Sized KC HRW Wheat Futures – (Decrease)

The May 2019 – July 2019 KC HRW Wheat calendar spread averaged 36.97 percent of financial full carry during the period of March 19, 2019 through April 26, 2019. Since this result falls below 50 percent of financial full carry, the maximum premium charge that a KC HRW Wheat regular delivery facility may charge holders of its outstanding shipping certificates will decrease from the current maximum charge of 26.5/100s of one cent per bushel per day (approximately 8 cents per bushel per month) to 16.5/100s of one cent per bushel per day (approximately 5 cents per bushel per month) on May 19, 2019.

The Next Evaluation Period

The next evaluation period for both contracts will measure the July 2019 – September 2019 calendar spread relative to financial full carry during the period of May 20, 2019 to June 21, 2019 with the next possible adjustment to contract premium charges on July 19, 2019.

 

VSR Updates

SER-8374 - Variable Storage Rate (VSR) Results for Wheat and KC HRW Wheat Premium (Storage) Rates

SER-8343 - Variable Storage Rate (VSR) Results for Wheat and KC HRW Wheat Premium (Storage) Rates

SER-8225 - Variable Storage Rate (VSR) Results for Wheat and KC HRW Wheat Premium (Storage) Rates

SER-8187 - Variable Storage Rate (VSR) Results for Wheat and KC HRW Wheat Premium (Storage) Rates

SER-7872 - Implementation of Variable Storage Rate (VSR) Mechanism in the KC HRW Wheat Futures and Mini-Sized KC HRW Wheat Futures Contracts Effective with the 2018 March - May Spread