WINNIPEG – The Winnipeg Commodity Exchange is taking a long hedge in the debate over wheat and barley marketing.
The board of governors decided last week it will develop international futures and options contracts for wheat and barley in case the Canadian Wheat Board loses its monopoly on the grains.
Spokesperson Larry Weber said the exchange does not want to be seen as wading into the debate. It just wants to be ready in case there are changes.
“It might never be used,” he said, referring to the research, expertise and analysis required to develop such contracts.
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“The board of governors are not taking a position either way, but they don’t want to be caught not being ready if there were changes occurring,” Weber said.
He also said new contracts cannot be developed overnight. For instance, the recent revisions to the exchange’s canola contract took about two years and involved outside specialists.
If there are changes to the wheat board’s monopoly and the exchange isn’t prepared with contracts to help industry players hedge their risks and discover prices, Weber said the industry would likely turn to contracts at other commodity exchanges.
“You would probably see something that wasn’t a made-in-
Canada solution.”
The research was suggested by a group of independent brokers and floor traders. Don Roberts, part of the group, said the board of governors was unanimous in its decision.
“We went to the board and said that there’s a genuine concern that we have to get our ducks in a row and I think they responded.”
He personally hopes the Western Grain Marketing Panel recommends an open market for wheat and barley.
Not in the debate
But Roberts stressed the exchange is simply acting progressively as a commercial operation, rather than getting involved in the political debate surrounding wheat and barley marketing.
A spokesperson for the Canadian Wheat Board said the exchange’s decision does not add fuel to the fire of the debate.
“In the scheme of things, it seems like a very minor development,” said Rhea Yates.
She added she is surprised the exchange would research new contracts when the Western Grain Marketing Panel has yet to make its recommendations about possible changes.
“But if that’s where (the exchange) wants to spend their resources, well, that’s fine,” she said. “It just seems like they might have wanted to wait until they saw what the marketing panel had to say.”
The Western Canadian Wheat Growers Association in a news release applauded the WCE for what it called responding to farmers’ requests for international futures and options contracts for wheat and barley.
