CHICAGO, Ill. (RFD News) — CME Group plans to launch a new sorghum futures contract on August 24, giving producers, elevators, feeders, and ethanol plants a tool designed specifically for sorghum basis risk.
The contract remains subject to regulatory review and marks the industry’s first futures market since the delisting of the MILO contract at the Kansas City Board of Trade (KCBT) in 1999.
Each contract covers 5,000 bushels and is priced as a differential to corn futures. That structure allows users to hedge changes in the sorghum-to-corn cash spread without taking full exposure to broader grain-market price movements.
Sorghum often follows corn over time, but local supplies, export demand, feed use, biofuel demand, and geopolitical events can cause the spread between the grains to move sharply. Those swings can affect producer bids, elevator inventory values, and processing margins.
The physically delivered contract will use shipping certificates and existing Kansas City hard red winter wheat delivery facilities. Registered locations include Kansas City, Wichita, Hutchinson, Salina, and Abilene, with established location differentials.
Trading volume will determine whether the contract provides dependable price discovery and useful hedging opportunities. Producers will watch whether elevators and commercial users adopt it ahead of harvest and export movement.
