WINNIPEG (Staff) – The Winnipeg Commodity Exchange is satisfied its new canola futures contract is working as it should.
The exchange examined the contract after its first delivery month, September 1996, was taken off the board.
John DePape, a spokesperson for the exchange, said cash and futures prices converged in the delivery month, indicating the contract was working.
Spot prices last month were $7 to $10 per tonne under the futures prices. DePape said the difference is due to elevator’s handling costs.
Less than one percent of the September 1996 contracts were delivered against the futures, which DePape said is within accepted levels.
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“The delivery mechanisms of futures contracts is required to discipline the market, ensuring that changes in futures prices reflect changes in the underlying cash prices,” said DePape in a news release.
“It is not meant to be an avenue for buying or selling grain, so we don’t anticipate large deliveries.”
DePape said volume for canola futures has increased. Even the furthest listed contract, November 1997, has good volume.
“I don’t know how anybody can argue it’s not working.”
The new contract was the subject of a court case when it was announced last fall. Some canola growers and other industry players believed it would affect cash prices for the oilseed.
