Few traders like CWB reforms
Floor traders at the Winnipeg Commodity Exchange were not cheering agriculture minister Ralph Goodale when he announced changes to the wheat board Oct. 4.
They support the Western Grain Marketing Panel recommendations as a first step in reforming the way Prairie farmers sell wheat and barley.
Reached Monday on the exchange floor, Denis Cattani, a canola trader who speaks for the Floor Brokers and Traders Association, said Goodale paid too much attention to the politics, rather than the economics, of the issue.
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And Cattani says the economics are that Canadian farmers are out millions of dollars annually and the Prairie economy is missing thousands of food processing jobs because of the Canadian Wheat Board’s monopoly.
He argues that Manitoba’s hog industry is booming, noting that Schneider is building a big slaughter facility in Winnipeg, hog numbers are up and producers are building large barns.
The reason for this, he says, is that the province took away Manitoba Pork’s monopoly and instituted a goal of doubling the hog herd to four million.
Of course a lot of this activity might also have been sparked by the end of the Crow Benefit.
Cattani says most canola is crushed in Canada because it is on the free market. But one also has to wonder then, why isn’t most flax processed here? And why is the malting industry growing?
Perhaps issues such as distance to major consuming areas and past government support are additional factors in determining how processing industries develop.
Cattani didn’t mention that if the grain marketing panel’s recommendations were accepted, it would probably mean a lot more business for floor traders like him.
But more business might be coming the way of the exchange no matter what. And again, pigs are in the spotlight.
The exchange announced last week that it will determine the feasibility of introducing a Canadian hog futures contract. The industry now takes direction from the Chicago Mercantile Exchange hog futures contract.
One of the drawbacks in using it is that the contracts are valued in U.S. currency. Although there haven’t been wild exchange rate changes in several years, cautious Canadian traders still have to turn to the currency markets to buy hedges against an exchange rate hiccup that could hurt them.
If Canadian farmers are going to make greater use of the futures market as a price insurance tool, as governments seem to be encouraging, then simplification and lower risk contract are worthy goals.
