I don't buy that non-delivery is the reason either. 

The reason is obviously because of the amount of money it takes to margin it.  Going to basis only proves it.....they are willing to take the risk of non-delivery.  They are willling to take the basis risk.  What they are not willing to take is the margin risk on the underlying futures contract.  

Covering the margin cost in the basis was the traditional way to do it.  There's a big difference between margining $3 corn when the market has traded between 1.75 and 4 for as long as anyone can remember and margining $6 corn when the market has moved three dollars in the last two years and is now moving back and forth 30-50 just for the fun of it.   

I'm sure there are commercials out there with unmargined cash contracts on the books which they have several DOLLARS of margin money invested in at this time....I'm holding some of them, so I have absolutely no doubt that they exist.