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Paris wheat market eyes Chicago-style calendar
May 10, 2013 / 2:41 PM / 5 years ago

Paris wheat market eyes Chicago-style calendar

* New delivery calendar among proposals made to trade

* Dealers say calendar shift has broad support

* Planned Atlantic delivery, new quality spec criticised

* NYSE Liffe pursues wheat review as ICE takeover looms

By Valerie Parent

PARIS, May 10 (Reuters) - The Paris wheat market could adopt a trading calendar similar to that used in Chicago, the world’s biggest grain exchange, in a shake-up planned by the European centre as it tries to reinforce its growing international stature.

Spectacular growth in recent years and changes in the U.S. market have brought pressure to adapt Paris’ wheat futures, prompting operator NYSE Liffe to launch a review last year.

NYSE Liffe has broad support for a proposal made last month to adopt a U.S.-style calendar for its milling wheat contracts, even if views diverge on the exact months to use, dealers said.

But stiff opposition to proposals to change other aspects such as delivery points and quality criteria, may limit the scope of the market revamp, they said.

The milling wheat futures are the flagship grain product of NYSE Liffe, the commodities exchange owned by NYSE Euronext.

Nicholas Kennedy, head of business development, commodity derivatives, at NYSE Liffe, said the review was continuing.

“We have made good progress,” he told Reuters, without commenting on proposed changes.

In an email to operators in early April, seen by Reuters, NYSE Liffe proposed to revise the calendar as of 2015/16 to have September, December, March and May as delivery months.

The Paris contract cycle currently comprises November, January, March and May futures. The long gap between May and November, accentuated by the scrapping last year of illiquid August futures, has been a major grievance among operators.

“Everyone agrees we shouldn’t have such a big gap between May and November. We need to break the dominance of the November delivery,” one dealer on the Paris market said.

The exchange’s proposal would bring it close to the calendar of the Chicago Board of Trade’s wheat futures , making it simpler for operators to arbitrage between European prices and the global benchmark that is CBOT wheat.

Chicago’s delivery months are July, September, December, March and May. CBOT has been through change of its own, twice shifting trading hours in the past year, as it reacted to competition from rival U.S. bourse ICE.

NYSE Liffe does not propose, however, to use Chicago’s July deadline, which would be unviable in Europe as it falls during harvesting. Some dealers want it to diverge further from Chicago by pushing back the last delivery month of the crop year from May to June to reflect better the European cycle.


There was much less consensus over proposals to add a new delivery point for wheat on the Atlantic coast and introduce an extra quality requirement in the form of a minimum standard for flour-making wheat. The proposal is for a Hagberg falling number of 220, dealers said.

The current situation in which there is a sole delivery silo in the northern port of Rouen, France’s top grain export terminal, has been criticised for creating supply tensions.

The relatively few milling quality criteria applied by NYSE Liffe has also raised concern that this is contributing to a levelling off in wheat quality in France that may hurt exports.

Some operators say the market has gained from having a well-known standard specification tied to the Rouen grain belt.

But another trader said: “Introducing quality criteria is going to remove some trading volumes, it would be an anti-market move,” he said. “The more standardised a contract is the more liquid it is going to be.”

Coop de France, the powerful federation of farm cooperatives controlling much of the grain supply from producers, has notably come out strongly against the Hagberg quality requirement.

Adding further delivery points at Rouen would be the best remedy against supply squeezes, some dealers said.

Others said revamping the wheat contract may create unnecessary confusion when NYSE Liffe is facing a change in ownership. A takeover of NYSE Euronext by ICE is pending regulatory approval, and ICE is expected to include Paris wheat in a spin-off of mainland European activities.

A change in trading hours, previously cited by NYSE Liffe as a possible response to later release times for key U.S. grain data, was not among the proposals submitted to operators.

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