Winnipeg Commodity Exchange Focus On Feed Wheat Futures Contracts

Feed wheat futures at the Winnipeg Commodity Exchange continued to trade within a relatively narrow range through the month of January.The March contract closed out the month of January at $142.20 per metric tonne.The March feed wheat futures contract price has stayed within a $15 per tonne range,with the contract high of $148.20 per metric tonne set on November 12,2003 and the contract low of $133.50 established on January 9,2004.While well off the 52-week lows seen in mid-July,nearby feed wheat futures have been stuck in a trading range since the past August.The 52-week high for the nearby futures price series was made in early February 2003.

While WCE feed wheat futures prices have remained rela-tively stable throughout the fall and early winter,changes in the price of CBOT corn and the Canada/US currency exchange rate has caused the WCE feed wheat minus CBOT corn spread to be quite volatile.After trading at a premium since the beginning of the 2003-04 crop year,WCE feed wheat futures prices actually closed out the month of January at a discount to CBOT corn.Trade sources suggest that the sudden changes in relative values may be due to the rapid increase in the price of corn during the month of January combined with the sudden decrease in the value of the Canadian dollar in the last half of the month.

The volatility of the WCE feed wheat minus CBOT corn futures spread has resulted in the basis for feed wheat ele-vator cash bids being much more stable against feed wheat futures when compared to CBOT corn.Since the beginning of the 2003-04 crop year,the basis for the average elevator bid for feed wheat in the Par pricing region against WCE feed wheat futures has had a range of $8.92 per tonne,while the average bid for feed wheat basis CBOT corn has had a range of $25.62 per tonne.This once again highlights the feed wheat futures contract 's effectiveness over the CBOT corn contract for price discovery and risk management in the feed wheat market in Canada.