Feed wheat futures are dead at Winnipeg’s commodity exchange.
Long live barley.
That’s the attitude of ICE Futures Canada, which is planning to promote the western barley futures contract as a good hedging mechanism for feed wheat buyers and sellers.
The feed wheat futures contract’s last positions were closed out last spring and its existence lingered on only as a listing until Oct.16 That was the last day of delivery for the October contract and the contract was then officially delisted. It has not been liquid for more than a year.
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Previous to Oct. 16, all the contract months except for October 2008 had already been eliminated.
Steve Teller, manager of the exchange’s regulatory division, said feed wheat hedging could probably be done by using the western barley contract. Barley is the dominant feed crop in Western Canada and futures in that crop are still liquid on the exchange.
A committee that examined reviving feed wheat considered changing the contract’s nature by moving to a cash-settled or an index contract, but found there were as many questions about that as the previous style.
However, the committee found that feed wheat prices and barley prices in Western Canada move closely, so the barley contract could be used effectively.
“The western barley contract that we still do trade actually has a pretty good correlation,” said Teller.
The exchange has seen the majority of its contracts wither and die over the years, losing oats, flax, peas and now feed wheat in less than a decade.
But its mainstay canola contract has grown along with the boom and volatility in commodity prices this decade, and western barley has hung on, although there have been many complaints about poor liquidity and big spreads.
Just because feed wheat has been delisted for now does not mean the exchange is walking away from wheat altogether, Teller said.
When it looked like the federal government might break the Canadian Wheat Board’s monopoly power, the exchange developed contracts that could have been used for some wheat board grain and that idea could be revived.
“Who knows what could happen with wheat?” said Teller.
“There may be some other wheat contract in the future. There aren’t currently any plans for that.”
