The Winnipeg Commodity Exchange’s August canola contract will be abandoned after August 2002.
The contract is a victim of the July contract, which has swallowed most of August’s old business. The July contract was introduced in 1997.
“We had record volumes of trade in canola and the August essentially saw none of that trade,” said the exchange’s senior economist Brent Futz.
While the July contract’s volume steadily grew between 1997 and 2001, the August volume dropped, sputtered and collapsed. August went from 51,684 contracts traded to 3,254, while July went from 269,912 to 406,050.
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The August contract was originally introduced as a bridge between the June and September contracts.
But in 1997 the exchange replaced the June contract with the July contract. That has created a better fit for that time of the year than either June or August.
Volume drifted to the July contract from August, leaving the August contract with little liquidity.
“The initial reason for implementing it diminished,” said Futz.
Commercial hedgers used the August contract on canola because it was compatible with the August soybean contract on the Chicago Board of Trade. But July seems to work just as well.
Overall canola futures trading at Winnipeg have been steadily growing.
In the crop year ending Aug. 31, 2,292,332 canola contracts were traded, a big jump from the previous year’s 1,797,176.
Canola options also broke through the previous record of 72,235 contracts traded in 1995-1996. In 2000-2001 105,240 were traded.
After August is removed, there will be canola contracts for January, March, May, July, September and November.
