Canada s leading agricultural futures market plans to be early out of the gate in capturing new business opportunities if and when the Canadian Wheat Board (CWB) loses its barley-and wheat-marketing monopoly.
Currently, ICE Futures Canada is in the final stages of developing new spring and durum wheat futures contracts and an enhanced barley futures contract, all of which will roll out as soon as Canadian lawmakers change the governing CWB Act.
The new futures contracts are good news for the agriculture industry, said Brad Vannan, president and chief operating officer of ICE Futures Canada.
They will provide competitive and transparent price discovery and risk management for farmers and anyone who conducts business using those commodities, (including) grain companies, flour mills, and exporters, he said.
The futures market is a very efficient and accurate reflector of the market. The value often changes moment by moment as various participants come in and bid or offer. In that regard, it is a huge advantage to western Canadian farmers as it provides valuable and dynamic pricing signals for their wheat, durum and barley.
ICE Futures Canada s new wheat, durum and barley contracts will be familiar, as their basic design will closely follow ICE Futures Canada s existing canola contract. The new contracts are also a return to the past for ICE Futures Canada, previously known as the Winnipeg Commodity Exchange, which has a long history of trading milling wheat futures. It started trading wheat in 1896 and listed wheat futures from 1904 until government regulations handed exclusivity for wheat marketing to the CWB in 1943.
Milling wheat was a commodity we were founded on, said Vannan. We ve been prevented by law from participating in this market for a number of years. The potential repeal of the CWB Act will return that opportunity to us, and it s one we certainly welcome.
Early interest in the new futures has been high, said Vannan, with grain handlers, merchants and others in the wheat and barley supply chain participating in the creation of the contract specifications. Overseas companies are already expressing interest, said Vannan, adding this is important for successful futures contracts.
The creation of the new futures will offer spinoff benefits. For example, a malting barley user could enter a production contract with a farmer by offering a basis price determined by a premium to the feed barley futures. That way, the farmer could grow the malting barley, commit the production to the malting company, and still have independent market-based price discovery.
Canada is seen as a very important global supplier, particularly in the grains we re focusing on, and as such a Canadian contract has the potential to be very successful, said Vannan. There certainly is tremendous capacity in the western Canadian ag industry to participate and compete globally.
Made-in-Canada futures contracts will offer price discovery and risk management that is more relevant and specific to the western Canadian market, said Vannan.
There are other commodity futures markets in the U.S. and Europe, but Canada is big enough and distinct enough that it deserves its own contract, he said.
His company will not be alone in benefiting from new opportunities following the CWB s demise, said Vannan.
The end of the CWB s marketing monopoly will be good for everyone in the industry, he said.
It will bring a tremendous amount of creative energy to the western Canadian marketplace. It will bring the opportunity for a number of creative minds to work with (wheat and barley) and to do it independently, which ensures that there s tremendous competition for farmers production. It will create an environment that forces people to work at the top of their game, as competition always does.
Thereareother commodityfutures marketsintheU.S.and Europe,butCanadais bigenoughanddistinct enoughthatitdeserves itsowncontract.