Wheat industry ponders the future ...

Press, 7 February 1986, Page 13

Wheat industry ponders the future ...

A wheat futures market in New Zealand moved closer this week when the establishment of a working party to determine the shape of a contract was approved by an Industry meeting. The deputy chairman of the wheat board, Sir James Stewart, said after the indusry meeting that interest was high in the formation of a wheat futures market. The board had Initiated

the investigation of a possible futures market, said Sir James, because it was concerned to try and leave the wheat Industry in the best possible shape after deregulation. Staff of the board had been working with Dr Brent Layton, of John Marshell and Co., a futures broker, in drawing up a draft wheat futures contract for discussion. This week’s meeting brought together millers,

growers, feed manufacturers and merchants, Sir James. Dr Layton spoke, as well as the chief excutive of the New Zealand Futures Exchange, Mr Len Ward, and the manager of the New Zealand branch of the International Commodities Clearing House, Mr Peter Fitzgerald. The working party would now finalise the draft contract and submit it for approval by the

Futures Exchange. Eventually it would be up to the industry to use the futures contract, said Sir James, which would be the only real test of its worth. But the Futures Exchange people ■ believed that the “prospective volatility of the wheat market, because of the movements in the New Zealand dollar and international wheat prices, would be such as to make minimising the

risk attractive to the industry.”

This attractiveness would probably be sufficient to generate a worth while number of contract trades, the experts assessed. The board would be at arm’s length from now on, the deputy chairman said. It is also putting together its own submission as well as summarising of others to the Government on the form and functions of the board from 1987-88 season onwards. These have to be sent to the Minister of Trade and Industry by the end of February. But it will then be a decision for the Government as to what, if any, board structure should be maintained.

It was incorrectly reported in “The Press” last Saturday that the board will cease control over wheat from 1987 and flour from 1989. The present timetable published by the Government for deregulation is February 1, 1987 for flour and February 1989 for wheat. Some people in the industry have questioned whether a half-deregula-tion is practical and whether it would be better to advance the decontrol of wheat.