CHICAGO: The Minneapolis Grain Exchange, home to US spring wheat futures, said on Thursday it was adding more quality rules to its century-old contract as it heads off competition from the IntercontinentalExchange wheat contracts coming next week.
MGEX said the US futures regulator, the Commodity Futures Trading Commission, approved its request to allow the delivery of non-US wheat for the first time against its 129-year-old contract. The change becomes effective with the September 2012 contract, and not the May 2013 contract, as MGEX initially proposed.
The majority of the non-US wheat is expected to come from Canada, the world's biggest grower of high-protein spring and durum wheats. Grain traders worldwide are watching Canada as the Canadian Wheat Board's grain marketing monopoly, the world's largest , is expected to end by August 2012.
The Minneapolis Grain Exchange, the smallest US wheat exchange after the Chicago Board of Trade and Kansas City Board of Trade, is seen as wanting to widen its hedging appeal, providing Canadian farmers and grain firms an established and liquid hedging alternative to Canadian wheat contracts set to debut on the ICE Futures Canada exchange on Jan. 23.
CWB has also traded big volumes on MGEX for decades, grain traders say.
Additionally, Minneapolis will discount hard red spring wheat delivered containing more than 2 parts per million vomitoxin -- a toxin caused by a fungal disease -- by 20 cents a bushel beginning with the May 2013 contract.
Any wheat exceeding 3 ppm will not be deliverable at MGEX designated warehouses. Currently, there is no vomitoxin rule at Minneapolis.
Storage rates will increase for spring wheat deliveries to 7 cents a bushel per month from 5 cents, also set to start with the May 2013 contract.
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