Reexamination of the Impact of the Removal of CBOT Corn and Soybean Futures Contract Delivery from Toledo, Ohio

Beginning with delivery on the July 2006 contract, non-convergence became an issue in the Chicago wheat futures contract. Despite several changes to the contract, convergence remains an issue. Recently, some have proposed eliminating Toledo, Ohio as a delivery point for the Chicago wheat contract. One concern is the potential impact this proposal could have on the cash-futures basis in the Toledo and surrounding delivery areas. To examine this issue, the impact of the removal of Toledo as a delivery point for corn and soybeans futures contracts beginning with contracts expiring in 2000 is examined. The changes in the Toledo and other Ohio corn and soybean basis conflict both in direction and significance, by crop and relative to changes in the corn and soybean basis in Illinois and Iowa. Thus, no consistent empirical evidence is found to support the claim that eliminating the Toledo switching district in 2000 as a delivery point for corn and soybeans had a serious detrimental effect on the corn and soybean basis in Ohio. These findings suggest that replacing Toledo as the primary delivery point for the Chicago wheat contract would not be expected to have a substantially negative impact upon the Ohio wheat basis.