WCE Press Release on Wheat/Barley Marketing

[charliep]

Just a note to highlight the WCE price release on Wheat/Barley Marketing.

WCE Ready for Dual Market in Canada
Tuesday, March 07, 2006 - Winnipeg - The Board of Directors of Winnipeg Commodity Exchange Inc. ("WCE") has approved in principle three new futures and options contracts to be listed when changes occur to the marketing system for wheat and barley in Canada.

"The new Federal Conservative Government has promised to move toward the implementation of a dual marketing system in Canada for the export of Canadian wheat and barley. WCE will have risk management products in place when the changes occur", said Lorne DeJaeger, Chairman.

The new contracts for spring and durum wheat and the revised contract for barley are modeled on the WCE flagship canola contract, with all three contracts having corresponding options contracts. "The major features of the contracts have been designed and the details will be finalized in the next few weeks", said Will Hill, Sr. Vice President of the Exchange.

WCE has been providing price discovery and risk management tools for a variety of commodities and financial instruments for over 100 years. WCE has worked with stakeholders in the canola industry within Canada and globally for over 40 years, where today the WCE contract is recognized as the world price discovery and risk management vehicle for canola and ****seed throughout the world.

"Canadian farmers and grain industry players can be confident that Winnipeg Commodity Exchange Inc. will be offering valuable made-in-Canada solutions to risk management and price discovery for wheat and barley in the dual market system. The canola contract is a vital part of the canola industry in Canada and we expect these contracts will also be a vital part of the grain industry", said Mike Gagné, President and CEO of WCE.

Winnipeg Commodity Exchange Inc., established in 1887, has been facilitating futures contract trading since 1904. WCE is Canada's only agricultural futures and options exchange and North America's first fully electronic commodity exchange.

For further information contact:

Will Hill
Senior Vice President
Winnipeg Commodity Exchange Inc.
(204) 925-5002

[timm]

when will we know more about this ,charlie.do we hold off on fpc and bpc with the board.isnt this a significant anouncement?

[charliep]

Support is significant but I would still be making marketing decisions based on the products that are available today. If the fpc/basis contracts meet your profit/risk management objectives, I would still sign them.

[Jman]

They'll work just as well as the flax, oats, rye and feed pea futures contracts, afterall, Canada held the majority of production for these commodities, and they still failed to attrat business.

Just as the oats futures in Winnipeg, market players will continue to use KCBOT and MGEX and CBOT contract to hedge their wheat. Remember, most of the Canadian grain comapnies are run by US grain companies who are already well established in the US commoditiy exchanges.

Quaker Oats Kellog and GMI never used the WCE Oats futures contracts, they continued to use the more fluid CBOT contracts.

[charliep]

Getting any new contract off the ground/running is tough.

I would note western barley futures currently functions reasonably well within the domestic (with a caveat that both the feed user and barley grower side have expressed concerns on volumes).

As steps toward a more open market for export feed barley and malt, are there ways this contract can be designed more effectively?

I note the new basis contract for malt barley (excluding my normal rant that is offered farmers but not maltsters). A bit of a stretch on how well they are correlated but a hedging tool none the less. The fixed price contract for feed barley does not have a basis contract but the CWB likely uses to manage risk.