CBOT Wheat Vomitoxin Rules

JUNE 9, 2015 -- The Board of Trade of the City of Chicago, Inc. (CBOT) is issuing this SER-7388 to reaffirm approved limits and conditions relating to vomitoxin levels for deliveries in connection with its wheat futures contracts.

In this regard, CBOT Rule 14104. (Grades/Grade Differentials) for Wheat futures contract (Globex Code: ZW; Clearing Code: W; Rulebook Chapter: 14) in relevant part states the following:

Effective September 1, 2013, all wheat shipping certificates shall be marked as either 2 parts per million deoxynivalenol (vomitoxin), or 3 parts per million vomitoxin. Shipping certificates marked as 2 parts per million vomitoxin shall be delivered at contract price, while shipping certificates marked as 3 parts per million shall be delivered at a 20 cent per bushel discount. A taker of delivery of wheat shall have the option to request in writing vomitoxin testing. At the taker’s expense, a determination of the level of vomitoxin shall be made at the point of load-out by the Federal Grain Inspection Service or by a third party inspection service which is mutually agreeable to the maker and taker of delivery. Regular facilities shall load out wheat containing unit average testing results of 2 parts per million vomitoxin or below for canceled shipping certificates marked as 2 parts per million and shall load out wheat containing unit average testing results of 3 parts per million vomitoxin or below for canceled shipping certificates marked as 3 parts per million.

For all load-outs of Wheat futures where the taker requests Federal Grain Inspection Service (FGIS) vomitoxin testing according to the procedures in the GIPSA DON (Vomitoxin) Handbook, the requirements for regular facilities are dependent on the loading orders issued by the taker:

For single unit load-outs, if the taker specifies either qualitative testing or quantitative testing with standard reporting in his loading orders, the regular facility is required to load wheat that does not exceed 2 or 3 parts per million (ppm) (rounded to the whole ppm) for cancelled Wheat shipping certificates marked 2.0 ppm or 3.0 ppm, respectively. If the taker specifies quantitative testing with optional reporting in his loading orders, the regular facility is required to load wheat that does not exceed 2.0 ppm or 3.0 ppm (rounded to the tenth ppm) for cancelled Wheat shipping certificates marked 2.0 ppm or 3.0 ppm, respectively.

For multiple car or multiple sub-lot load-outs, if the taker specifies either qualitative testing or quantitative testing with standard reporting in his loading orders, the regular facility is required to load wheat with the average across all cars or sub-lots within the unit not exceeding 2 ppm or 3 ppm (rounded to the whole ppm) for cancelled Wheat shipping certificates marked 2.0 ppm or 3.0 ppm, respectively. If the taker specifies quantitative testing with optional reporting in his loading orders, the regular facility is required to load wheat with the average across all cars or sub-lots within the unit not exceeding 2.0 ppm or 3.0 ppm (rounded to the tenth ppm) for cancelled Wheat shipping certificates marked 2.0 ppm or 3.0 ppm, respectively.

Similarly, CBOT Rule 14H.13.A. (Surrender Electronic Warehouse Receipts) for KC HRW Wheat futures contract (Globex Code: KE; Clearing Code: KW; Rulebook Chapter: 14H) in relevant part states the following:

14H13.A. Surrender Electronic Warehouse Receipts

Deoxynivalenol (also known as Vomitoxin) Restriction:

When electronic warehouse receipts are surrendered to the issuer for load-out pursuant to Rule 14H13, the taker of delivery shall have the option to, at taker’s expense, request in such written load-out instructions that the wheat contain no more than 2 ppm (two parts per million) of deoxynivalenol (vomitoxin). A determination of the level of deoxynivalenol shall be made at the point of origin by the Federal Grain Inspection Service or such other third party inspection service mutually agreeable to the maker and taker of delivery. The determination of the level of deoxynivalenol shall be based on the average test results of the wheat loaded in a single day from a single warehouse for each taker of delivery. As of the effective date of this rule (September 1, 2011), any electronic warehouse receipts previously issued and outstanding shall be subject to the provisions of this Rule.

For all load-outs of KC HRW Wheat futures where the taker requests FGIS vomitoxin testing according to the procedures in the GIPSA DON (Vomitoxin) Handbook, the requirements for regular facilities are dependent on the loading orders issued by the taker:

For single unit load-out, if the taker specifies either qualitative testing or quantitative testing with standard reporting in his loading orders, the regular facility is required to load wheat that does not exceed 2 ppm (rounded to the whole ppm) for cancelled HRW Wheat warehouse receipts. If the taker specifies quantitative testing with optional reporting in his loading orders, the regular facility is required to load wheat that does not exceed 2.0 ppm (rounded to the tenth ppm) for cancelled HRW Wheat warehouse receipts.

For multiple car or multiple sub-lot load-outs, if the taker specifies either qualitative testing or quantitative testing with standard reporting in his loading orders, the regular facility is required to load wheat with the average across all cars or sub-lots within the unit not exceeding 2 ppm (rounded to the whole ppm) for cancelled HRW Wheat warehouse receipts. If the taker specifies quantitative testing with optional reporting in his loading orders, the regular facility is required to load wheat with the average across all cars or sub-lots within the unit not exceeding 2.0 ppm (rounded to the tenth ppm) for cancelled HRW Wheat warehouse receipts.

For multiple car load-outs in either Wheat or KC HRW Wheat futures, the taker may also request in his loading orders a vomitoxin certification for each rail car (e.g., quantitative testing per rail car; unit not to exceed 2.0 ppm), or vomitoxin certification for a composite number (up to 5) rail cars (e.g., quantitative testing composite 5 rail cars; unit not to exceed 2.0 ppm).

As with USDA grade inspections (see CBOT Rule 703.C.A.2. (Load Out)), under CBOT Rules 14104. and 14H.13.A., it is the responsibility of the taker (i.e., holder of shipping certificates or warehouse receipts) to request for the warehouseman to arrange for FGIS vomitoxin testing. In such cases, the warehouseman is consequently the FGIS testing applicant.

Questions may be directed to Fred Seamon (312-634-1587 or Fred.Seamon@CMEGroup.com) or Dave Lehman (312-930-1875 or David.Lehman@CMEGroup.com) in Research and Product Development.

SOURCE: http://www.cmegroup.com/tools-information/lookups/advisories/ser/SER-7388.html#pageNumber=1