While he recognizes the need to maintain commodity markets as hedging tools, the new boss of ICE Futures Canada says there should be room for all traders in the on-line pit.
“We’re always concerned that the contract is working as good as it possibly can. But we also need to recognize that the contracts are used differently than they might have been historically,” said Brad Vannan.
“I think the traditional user has to understand that the use of the contract is evolving …. Our job is to ensure that there is a tool that can be used by all participants.”
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Vannan, who officially became president and chief operating officer April 30, takes over in what might be the most turbulent period in the history of agriculture markets. That may explain why ICE Futures picked the calm and thoughtful University of Manitoba agriculture graduate to head up the Winnipeg exchange.
Vannan has worked in the grain trade for 23 years. In 1984, he began his career as a barley trader at Pioneer Grain. He served as the managing director of grain merchandising at United Grain Growers and last year was a vice-president at Agricore United, responsible for four divisions.
He lost his job when the Saskatchewan Wheat Pool took over AU last summer. The one regret of losing his position, Vannan said, was that he had to sit on the sidelines during good times in the grain trade.
“The last time that agriculture saw a pronounced boom period was back in the ’70s. So I missed that one,” he said. “I’ve been working through 23 years of recession (in agriculture) and finally I see better times on the horizon. I didn’t want to miss out on that, so I’m happy to be back.”
Over the last few months, while Vannan was out of the industry, critics from inside and outside the grain business have questioned the immense power of commodity funds in the market. But Vannan said the markets can serve farmers along with other users, like commodity funds.
“You have to separate what is perhaps a phenomenon in the market today … versus, ‘is there something chronically wrong with the contract that need to be fixed?'”
Tony Tryhuk, a broker with RBC Dominion Securities in Winnipeg, agrees with Vannan’s view that “if it ain’t broke, don’t fix it.” The funds provide essential liquidity to the market and are not a detriment to the Winnipeg exchange, he said.
“If you were to take a defensive approach and eliminate that sector from the marketplace, or curtail that activity, it could really hamper the liquidity that these guys have brought to the marketplace,” Tryhuk said.
Speaking about a possible contract for barley if the Canadian Wheat Board loses its monopoly on barley exports, Vannan said ICE Futures has a contract at the ready, which is modeled after the canola contract.
“The barley contract has every opportunity to be very successful … if there’s a need for it,” he said.
When asked about the ailing feed wheat contract, which has zero open interest, Vannan said there are plans for a grain industry committee to look at it.
“We are trying to address that issue,” he said.
