ICE Canada revamps barley futures contract

The former Winnipeg Commodity Exchange on June 22 will list a new and overhauled western barley futures contract, and has cleared the way by delisting all but three months on its current contract.

Winnipeg-based ICE Futures Canada said in a notice to participants Thursday that the new contract “is expected to provide a more effective risk management and price discovery tool, by better reflecting the underlying market for western Canadian barley.”

ICE Canada’s current “Rule 18” barley futures contract months from March 2010 onward are delisted effective immediately, while July 2009, October 2009 and December 2009 will remain listed.

Starting June 22, the new “Rule 19” contract will list November 2009, January 2010, March 2010 and onward under the new contract specs, using the same “AB” symbol as the current contract.

Except for Nov09 and Jan10, the new contract months will be March, May, July, October and December, ICE said.

Among the major changes to come with the Rule 19 contract, delivery will be to the buyer’s facility, rather than the FOB seller’s facility. The warrant-issuer, rather than the buyer, will arrange and pay for freight. Shipment will be by truck only, not by railcar.

Alberta feeders

The new contract will be priced using a delivery region in southern Alberta only, as opposed to the current contract’s par delivery region in central Saskatchewan. One market watcher earlier this week had expected such a move, in a bid to get feedlot operators in southern Alberta to use the contract again.

The new contract also calls for the creation of a new participant group, “barley merchants,” which along with the existing “merchant multi-commodity” category will be permitted to make delivery against the new contract.

ICE warned Thursday that delivery paper issued under the current contract won’t be “fungible” (that is, interchangeable) with the new contract.

As well, the new contract’s delivery certificates must be called for shipment by no later than the last business day in July each year. The current contract’s certificates had no deadline to call for shipment and could have been left outstanding indefinitely.

The new contract’s speculative position limits will be 250 contracts in the spot month, down from 500 in the current contract.

ICE on Thursday said it’s also eliminated the nomination rejection fee, effective immediately, so as to encourage delivery certificate holders to call for shipment and close out their paper.

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