MGEX cleared for non-U.S. wheat on HRSW contract

U.S. federal regulators have approved MGEX’s plan to remove U.S. origin as a condition of delivery on its hard red spring wheat (HRSW) contract.

The Minneapolis grain exchange said Thursday it’s received approval from the Commodity Futures Trading Commission (CFTC) for this change and others to its "flagship" HRSW contract.

With the U.S. origin condition lifted, "spring wheat market participants from around the world can choose to deliver spring wheat in satisfaction of open MGEX HRSW futures positions," the exchange said in a release.

The removal of the U.S. origin requirement will take effect with the September 2012 contract month, MGEX said.

MGEX said it has also added a deoxynivalenol (DON, or vomitoxin) specification to the HRSW contract, effective with the May 2013 contract month, for a maximum two parts per million (ppm) for spring wheat delivery.

Vomitoxin levels above two ppm would be delivered with a 20-cent per bushel discount, while levels above three ppm vomitoxin "will not be deliverable on the HRSW contract," MGEX said (all figures US$).

The DON specification, MGEX said, "will continue to showcase the HRSW futures contract as the foremost quality wheat contract available to global market participants."

MGEX said it has also raised its storage rates for spring wheat delivery on the HRSW futures contract, up from the current five cents to seven cents per bushel per month, also effective with the May 2013 contract month.

MGEX CEO Mark Bagan said the changes represent "a significant step in cementing the MGEX hard red spring wheat contract as the world’s premium quality wheat contract."

It’s expected the majority of non-U.S. spring wheat delivered to the HRSW contract will come from Canada, pending the full effect of Canadian federal legislation that shuts down the Canadian Wheat Board’s single marketing desk for Prairie wheat and barley.

Barring any successful court challenges of Bill C-18, the CWB’s single desk ends Aug. 1.

Related stories:

MGEX membership approves non-U.S. wheat deliveries, Sept. 6, 2011

ICE Futures Canada not worried about MGEX plans, Aug. 18, 2011

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