Charlie.....

[jgstuart]

Just received the following note from the WCE....
October 6, 2003
Winnipeg Commodity Exchange Inc. has approved the following Participant Application(s)/Agreement(s):


The Canadian Wheat Board
Company Ancillary Participant in the category of General – No Reduced Fees
Authorized Representative: Mr. Curt Denisuik

Does this mean the CWB will be an active trader on the WCE, and if so....to what end, since both the wheat and barley markets are primarily domestic feed markets.

[charliep]

No immediate answers. Will have to ask questions.

Observations.

1) The CWB does seem to be using Western barley futures in both the producer pricing options and early pricing options based on following changes in forward pricing in the first case and daily changes in second case.

2) Both exporters and maltsters have been seeking a closer tie of malt barley prices to WCE futures so they have a tool to manage their price risk.

Would having the CWB a full participant in western barley be a bad thing?

[charliep]

OR.......will they complete EFP's to fill their sales to the Saudis or stand for delivery.

We've had two elevator companies go to $2.50 in the pit to own heavy barley in the last three weeks to fill cars.

OR.....is Ralph planning a new look CWB!

[rain]

Larry are producers selling at $2.50 delivered. What region of Saskatchewan is this North West or North East?

[TOM4CWB]

Charlie;

The CWB MUST become commercially accountable, or integrity of the WCE trades is at risk.

The issue is that the CWB can easily manipulate and direct the contract they are trading in, much like Excan attempted in the past... only the CWB has unlimited resourses from the pool accounts and contingency fund they maintain... without accountability to anyone anywhere.

If the CWB were a commercial entity, with grain secured through commercial contracts (without the threat of a jail term for selling elsewhere)

... THEN, I would have no problem with CWB involvement in WCE feed wheat and feed barley domestic contracts.

[TOM4CWB]

They didnt take long to fill cars at $2.50.

One was in the NW, the other in Saskatoon.

With the Japan cow news this morning, might not have been a bad idea.

[chaffmeister]

The CWB can trade futures at WCE without being a registered participant - they've been trading barley for some time now. Becoming a registered "Participant" doesn't do much for them in terms of trading access. However, it would allow the CWB a certain amount of influence over contract terms etc - even a vote on major contract changes and the like.

I'm not too familiar with the new EFR (Exchange For Risk) but I wonder if you need to be a registered participant to take part in these ex-pit exchanges of futures (EFRs are similar to EFPs (exchange for physicals) in that they are ex-pit exchanges of futures positions between two counterparties. EFPs must be related to a cash transaction, EFRs must be related to an over-the-counter (OTC) derivative risk position that is related to the futures.)

Perhaps the CWB is using OTC derivatives on barley (for the FPC) and feel an need to be able to EFR. Anyone else have any ideas why the CWB needs to be registered with the WCE?

For what its worth, here's a little history. The CWB was a trading member of the exchange until the mid seventies and, even though it stopped trading in Winnipeg, it held its WCE memberhsip until the late 80's.