CME Group introduces new spring wheat futures contract

The CME Group has introduced hard red spring wheat futures contracts, making it possible to trade all major varieties of North American wheat on a single exchange. This new contract will be offered alongside the Minneapolis Grain Exchange’s (MGEX) hard red spring wheat benchmark contract, which has a 142-year history. The success of the new CME contract remains uncertain, especially given the competition and the fact that some delivery specifications and rules are different. The outcome will hinge on commercial entities' adoption of the new contract. The failure of a similar attempt by ICE Futures Canada following the end of the Canadian Wheat Board’s marketing monopoly serves as a cautionary example.

The CME Group has launched its hard red spring wheat futures contracts. “Market participants can now trade all major varieties of North American wheat on a single exchange,” CME said in a recent article it published about the new HRSW futures and options. It will trade alongside the current Minneapolis Grain Exchange’s (MGEX) hard red spring wheat benchmark contract that debuted in 1883. “It’s very hard to establish a new spring wheat contract,” said MarketsFarm analyst Bruce Burnett. “It takes a lot of skill and luck to get a new contract off the ground that does significant volume.” The volumes for the CME contract so far have been “fairly disappointing.” He doesn’t think there was a burning need for a new contract, but it will be interesting to watch the two exchanges duke it out in the coming months and years. Burnett thinks there will only be one eventual survivor. MGEX has a 142-year legacy, but CME has huge trade volumes with other agricultural commodities. “We’ll ...