The Winnipeg Commodity Exchange has decided to change its canola, flax, feed wheat and oats contracts to allow more market participants to make or take physical delivery of grain.
Exchange members who own delivery facilities will be able to issue warrants for farmers and other market players, said exchange spokesperson Sandra Craven.
For example, a farmer who has sold a futures contract and wants to make physical delivery of his or her grain will be able to go to a registered elevator or crusher and negotiate a services contract.
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The owner of the facility would then take responsibility for the grain, keeping it in condition until the buyer of the futures contract calls for the grain.
It will be up to grain companies to determine what kind of services contract they provide, said Craven.
The exchange hopes to have the changes in place for new-crop contracts. The Canadian Grain Commission and Ontario Securities Commission are looking at the changes.
The Winnipeg exchange changed its contracts to allow for third-party delivery after farmers and others expressed interest in the idea.
Craven said the exchange made sure the changes would not affect the integrity of the contracts.
“You have enhanced delivery but there’s no added risk of default.”
The exchange doesn’t expect to see more people making physical delivery of grain against their futures positions, said Craven, because the futures and cash prices have been converging well.
