New York Canola Futures

[Agvocate]

ICE futures moving to NY at the end of June. Given its all electronic does it really matter if it's in Winnipeg, New York or Mexico? But it will be the only contract in Canadian dollars on ICE. Does it eventually become a US dollar contract?

[farming101]

Don't see how that would work well for contracts in delivery

[Agvocate]

currently no canadian delivery option for corn, oats, beans, or any of the wheat contracts and they are all used to hedge Canadian grain. they would have to change the delivery mechanism if they changed the currency of the contract.

[povertyplains]

Best part about the contract being in New York is it now falls under the US Commodity Futures Trading Commission. That should mean reporting of positions and a more accurate idea of the funds positions

[bucket]

Reporting??????leading to transparency?????...whoaa slow down there cowboy....lol

[povertyplains]

Lol. Well the fund position will be more transparent but the grain companies will hide the exchange rate in the basis when it eventually switches to US$.... So your right shouldn't get to far ahead of myself...

[beaverdam]

Basis will be less transparent if traded in USD,,,,just another way for graincos to pad the basis, in a non obvious way.

[Agvocate]

If it were to change basis would be the same as it is on wheat where all the currency risk is built into the basis. There is still currency moves in canola today, they just all go into the futures. The world market already trades in US dollar terms. It would look different than we have seen canola for the last 40 years but in theory the realized spot price at the elevator shouldn't change. Forward contracting on basis would be quite different though.

[farming101]

Glad you said "in theory" .....