A visit to the trading floor

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Published: January 25, 1996

WINNIPEG – I have a confession to make. Even though I’ve reported on the agricultural commodity markets for almost nine years, I had never been on the floor during trading hours at the Winnipeg Commodity Exchange.

But I have seen another exchange in action. In 1987 I visited the Chicago Mercantile Exchange to see the trading in pork bellies and cattle futures. Earlier this week, I made sure a trip to Winnipeg included a stop at the WCE.

There aren’t nearly as many people in the trading pits at the WCE as I recall at the Merc but it seemed louder. Perhaps it’s because the sheer crush of traders and runners in Chicago, each with their color-coded jackets, rely on hand signals to communicate their orders.

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At the WCE, shouting is used as much as hand signals. The voices are still predominantly male, even though the proportion of females in the agricultural industry has certainly changed in the last decade. There’s just one woman trader on the WCE floor.

Fortunately for farmers and journalists, understanding how the futures market works can be accomplished without witnessing the open outcry system.

But I was struck by a couple of things on this visit. Compared to the thousands of Prairie farmers needed to grow the barley, feed wheat, oats, feed peas, flaxseed and canola traded at the WCE, relatively few players are needed to trade them. The WCE has 240 members, and not all of them are actually on the floor trading.

The other note is how canola dominates trade at the WCE. The floor has two trading pits – one for oilseeds, one for feedgrains.

Canola buyers and sellers stand on the east side of the oilseed pit; flax on the west. Barley traders get the west side of the feedgrains pits and the rest of the feedgrains get the east side. There was decidedly more elbow room in the feed grains pit.

WCE statistician Darren Sokal, my guide on the trading floor, said canola accounts for about 75 percent of the volume of trade at the exchange. What does that mean? For the crop year starting in August of 1993 and ending July of 1994 – the latest figures Sokal had available – 1,144,715 20-tonne lots traded in canola. Feed wheat was the next biggest volume traded at 218,318, with flaxseed a distant third at 99,513 lots.

On a daily average of 4,579 lots in canola and 873 in flax, daily volume in canola peaked in January and was slowest in August, October and June.

Canola’s importance to the WCE is more apparent when that volume is translated to cash. Sokal took the average monthly price and multiplied it by the volume traded for each futures contract month.

All told, the WCE did $9.82 billion in trade during the 1993-94 crop year. Of that, canola accounted for $8.4 billion, or 86.4 percent of that crop year’s trade. No wonder the canola pit is crowded.

About the author

Adrian Ewins

Saskatoon newsroom

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