PARIS, Sept 4 (Reuters) - The Euronext exchange said it would decide in the next two months whether to add quality specifications to its milling wheat futures contract <0#BL2:> in line with new rules by silos to ensure delivery of suitable wheat out of a poor French crop.
Euronext’s wheat contract, a price benchmark in Europe, is defined as a milling wheat grade suitable for making bread. But traders see its current quality specifications as basic.
The prospect that much of the new French crop will be of lower, animal-feed quality due to heavy rain has intensified debate over what standard Euronext represents.
The exchange said last month it would discuss adopting the same wheat quality terms as the silos to bring greater clarity to the market.
It will decide on any changes before the September 2017 futures open for trading on Nov. 11, following the expiry of the November 2014 position, an official said.
“We hope the question will be settled before the expiry of the November futures,” Olivier Raevel, head of commodities at Euronext, told Reuters by telephone. “We would prefer not to have to suspend the opening of September 2017 futures.”
Euronext is not able to change contract terms for futures that are already trading, which currently includes positions for delivery up to May 2017, in line with its policy of offering a three-year trading horizon.
Last month, Senalia and Socomac, the operators of the silos that can take delivery of 2014 crop traded on Euronext, set requirements for Hagberg falling numbers and protein content, two wheat quality measures that are not included in Euronext’s contract specifications.
The silos’ move was welcomed by some operators who were worried that the milling wheat status of the Euronext contract was at risk, but was criticised by others as creating confusion by adding terms not in the actual futures contract.
Euronext is not ruling out any proposals at this stage on how to modify the contract, Raevel said, adding it was cautious about suggestions that the exchange launch a separate high-quality wheat contract, because this might dilute market liquidity.
The exchange said previously it would hold a meeting of experts in September to discuss adopting Hagberg and protein standards, but it is now planning an email survey in order to consult a wide international base of market users, Raevel added. (Reporting by Valerie Parent and Gus Trompiz, editing by Sybille de La Hamaide and Jane Baird)