Non-Convergence in Domestic Commodity Futures Markets: Causes, Consequences and Remedies

Economic Information Bulletin No. (EIB-115) 33 pp, August 2013

From 2005-10, the price of expiring U.S. corn, soybean, and wheat futures contracts settled much higher than corresponding delivery market cash prices. Theories about why this unprecedented non-convergence occurred are examined along with policy options to prevent it in the future.

Keywords: Commodity futures, delivery, index funds, grains, non-Convergence, price discovery, risk management, speculation, storage

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Last updated: Tuesday, August 06, 2013

For more information contact: Michael K. Adjemian, Philip Garcia, Scott Irwin, and Aaron Smith