One of the significant changes in the contract design is a move in the pricing point to a Par region within the central portion of Saskatchewan, from the current contract, which is based on a Thunder Bay pricing point.
"The change in pricing point is quite significant," said Bruce Love, WCE Director of Marketing. "It is important for market participants to understand how the contract differs from the previous WCE feed wheat futures contract design and how the changes will affect the appropriate price levels for the contract relative to the underlying cash market values."
The introduction of a redefined deliverable grade specification, which more closely reflects the quality parameters that dominate trade in the underlying cash market, is expected to enhance the relevance of the contract.
Changes were also made to the delivery mechanism, which make the load-out and shipment obligations defined in the futures contract consistent with the "normal" activities of the underlying cash market, without undermining the financial integrity of the futures delivery mechanism.
Another feature of the new contract design is the expiration of trade on the business day preceding the fifteenth calendar day of the delivery month, with the last delivery day being the second business day after the last day of trade.
The shift in the pricing point, coupled with other modifications to the contract terms, is expected to encourage better convergence between cash and futures prices. Also, it is anticipated the revised contract design will improve the applicability of the contract to all market participants.
WCE is a not-for-profit organization and Canada's only agricultural futures and options exchange. WCE offers futures contracts on canola, flaxseed, domestic feed wheat, western barley, oats, and field peas. Options contracts are available on canola, flaxseed, feed wheat, and western barley.
