Canadian flax growers are concerned that the Winnipeg Commodity Exchange’s much beleaguered and often renovated flax contract may not survive last month’s move to electronic trading.
Eric Fridfinnson, president of the Flax Council of Canada, told the Saskatchewan Flax Development Commission meeting in Saskatoon on Jan. 10 that the loss of that price discovery mechanism “wouldn’t be good for producers in this country.”
He said the contract’s liquidity was a problem before the exchange changed its trading system.
Bill Farley, a seed grower and flax producer from Lumsden, Sask., agreed with Fridfinnson’s concerns.
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“As producers we need to maintain all the methods of price discovery we can.”
Fridfinnson said it has been difficult for the exchange to keep the smaller commodity contracts like flax alive.
“The (WCE) is caught in the problem of high overhead costs and the move to electronic trading could place the flax contract in a highly debatable position,” he said.
“I hope that it might be good for the contract, but buyers and sellers need to make use of it for it to survive.”
Peter Boswall of Prince Edward Island’s agriculture department said growers in that province depended on the contract to help determine their prices this year. He has been working with new flax growers who want to use the crop as a rotation with cereal forages and potatoes. Growers used the WCE’s flax settlements to determine contract prices when delivering Norman flax to Natunola in Winchester, Ont.
Fridfinnson said that without a futures contract, producers would likely need to turn further toward a mix of “production contracts such as we have seen in pulses or a more helter-skelter system like in the feed grains industry.”
