CWB use of futures for hedging

[melvill]

Does the CWB use the futures market (presumably the Minneapolis Grain Exchange) to hedge forward wheat sales? If so, when did that start? I understand that in the past, the Board's governing legislation wouldn't allow them to take futures positions for any reason. Was that so?

[juntersc]

The CWB has used futures contracts on wheat for hedging. This has been on going for the past several years. The CWB uses contracts on MGE, KCBT and the CBOT. The MGE wheat contract is the closest to hard spring wheat but it has more liquidity problems. The CWB needed changes in legislation to offer the fixed price and basis contracts that started this year. Jim Unterschultz U. of A.

[juntersc]

My response is a little delayed, but better late than never. Jim's correct, the CWB uses not only the grain exchanges, but also hedges US currency. The positions in the grain futures markets have often been to facilitate basis contracts with buyers. Tom