Having reviewed its alternatives, ICE Futures Canada has announced it will delist its feed wheat contract effective Thursday, the last delivery day of the October 2008 contract.
The Winnipeg commodity exchange had pulled its December 2008 and subsequent feed wheat futures contract months from trading in May, pending a review by a feed wheat subcommittee of its board of directors.
In a notice Friday to exchange participants, ICE said its subcommittee met several times over the summer to review “various aspects” of the feed wheat market and analyze possible alternatives in terms of its contract specs.
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ICE Futures Canada, the Canadian wing of Atlanta-based InterContinental Exchange (ICE), said Friday its subcommittee has found “a number of fundamental market factors which have contributed to the decline in feed wheat futures trading volumes.”
Furthermore, the subcommittee found that “other contract designs — such as cash settlement or index-based — carried with them their own difficulties which would likely make them non-viable.”
By analyzing historical price data, ICE said, its subcommittee found that its current western barley futures contract “carries a high degree of correlation with the domestic feed wheat market, and could serve as an effective hedging tool for feed wheat.”
To that end, the subcommittee has “encouraged” ICE Futures Canada to
promote the use of western barley futures for this purpose.
ICE Futures Canada management had recommended to the exchange’s board in early May that the December and subsequent feed wheat futures contracts be removed from trading. Management had cited “current lack of trading activity and open interest” in the contract, along with “various factors” that influence supply and demand in the cash market for feed wheat.
