CHICAGO, Ill. — Recent changes in how the CME Group will handle its wheat futures contracts are not expected to have much of an impact on wheat growers, at least according an Ohio State University agricultural economist.

Matt Roberts, who spent two years as a wheat broker before joining the staff of OSU, said while the changes will have an impact on wheat that is deliverable against contracts at the Chicago Board of Trade (CBOT), it won’t have much of an impact on wheat grown and delivered by farmers to local grain elevators.

“This is an effort to get the quality of wheat in line with the price of futures contracts,” said Roberts. “It’s going to ensure the futures price of wheat tracks the physical price of wheat.”

According to the announcement from CME, which owns and operates CBOT, the changes were the result of feedback from a cross-section of the wheat futures industry.

“As part of our regular and ongoing contract review process, and working together with a broad cross-section of industry participants, we have identified several wheat futures contract modifications to ensure the contract continues to meet customer trading and risk management needs,” said Tim Andriesen, managing director, agricultural commodities and alternative investments for CME.

He said since February, CME has been discussing potential contract modifications. Starting Dec. 1, the exchange will allow hard red winter wheat, dark northern spring and northern spring wheat grades to be deliverable in the St. Louis territory. Currently, those grades of wheat are deliverable only at other locations.

In a second phase beginning in September 2013, wheat futures contracts will eliminate wheat containing 4 parts per million (ppm) vomitoxin from deliverable grades; will increase the discount for wheat containing 3 ppm vomitoxin from 12 cents per bushel to 20 cents; and will reduce the discount for wheat delivered in northwestern Ohio from 20 cents per bushel to 10 cents.

Roberts said he wasn’t certain why northwestern Ohio wheat was singled out but noted there have been reported cases of wheat scab in that area, and the change may have something to do with that.

“These changes are focused primarily on improving the quality and merchantability of the wheat in the delivery system,” said Andriesen. “We believe these modifications will further enhance the strong convergence we have seen in recent contract delivery periods.”

Meanwhile, Vince Peterson, vice president of overseas operations for U.S. Wheat Associates in Washington, D.C., said, “We suspect the global trade will notice very little change in the Chicago futures and cash soft red winter wheat markets attributed solely to these changes.”

Peterson, a former commercial grain buyer, said the domestic food processing industry standard for safety is 2 ppm, as are wheat futures contract specifications on other exchanges.

“The same applies to most export contracts; some are even tighter, so the change in the CME soft red winter contract is getting closer to the norm for trade. That is a move in the right direction and brings the contract a bit closer to commercial quality standards,” he said.

“It is a small step toward stability in the area of convergence, but fully embracing a 2 ppm industry standard should be the eventual goal of the contract.”

Now, said Peterson, the cash price of wheat is about 20 cents below cash corn for what is going into feed or ethanol. “I would say this is an improvement, but I would be doubtful that this will make a really significant difference,” he said.

Roberts explained the CME changes bring the cash prices of wheat more into line with the price of milling-quality wheat, which is traded as a higher quality product. While processors in the United States prefer to use milling quality wheat, many customers elsewhere in the world use wheat for feed, something that is not as common in this country.

“The biggest impact of the CME changes will be felt for the futures contracts of wheat at registered elevators,” said Roberts. He pointed out not all local elevators are registered to accept delivery of wheat delivered against futures contracts.