Bloomberg News

NYSE Liffe to Delay 2015 Milling Wheat Future in Quality Dispute

November 05, 2012

NYSE Liffe will delay milling wheat futures for November 2015 delivery after Senalia, a storage operator that acts as the contract’s sole point of delivery, imposed additional quality criteria for grain it receives.

NYSE Euronext (NYX:US)’s Paris derivatives exchange is in talks with Senalia, clearing house LCH.Clearnet and regulator Autorite des Marches Financiers about the contract, Lionel Porte, NYSE Liffe’s head of commodity products, said by phone from the French capital today.

Senalia said on Sept. 21 it would refuse all wheat with a Hagberg index below 220 until the end of the 2012-13 season, referring to an indicator for baking quality. The NYSE Liffe contract doesn’t stipulate minimum values for Hagberg, also know as the Falling Number.

“Our specifications for the wheat contract remain unchanged,” Porte wrote in an e-mailed statement today. “We don’t have the plan to modify a contract for which positions are open and the maturities committed.”

The November 2015 contract was supposed to start trading on Nov. 13, and the future will now be suspended as NYSE Liffe re- examines the technical specifications of the contract, the exchange wrote in an e-mailed statement on Nov. 2.

Marc Blaiset, head of logistics at Senalia, declined to comment on talks with NYSE Liffe.

“At the start of the harvest we knew there was great variety in the wheat quality, this was a measure put in place for export markets,” Blaiset said by phone today. For the November 2012 delivery, “we have merchandise in store,” he said, declining to comment on later delivery dates.

Gilles Kindelberger, Senalia’s director for cereals, is traveling and wasn’t immediately available, according to Blaiset.

Milling Wheat

The Hagberg number is above 220 for 72 percent of French soft wheat, crop office FranceAgriMer reported in September. Importers typically demand a value of at least 220 for milling wheat, according to the crop office.

NYSE Liffe milling wheat must have a minimum specific weight, an indicator of how much flour can be milled from a quantity of grain, of 76 kilograms per hectoliter (2.84 U.S. bushels). The contract doesn’t specify values for protein content or Hagberg.

Senalia in August temporarily banned wheat with a Hagberg below 220 from entering silos at its two grain terminals in Rouen on the Seine River. The board on Sept. 11 agreed to refuse such wheat until the end of the season, according to the company.

The company said in August it sought to avoid blocking port facilities with wheat that doesn’t meet minimum export specifications and to avoid quality deterioration by mixing stored wheat with grain of inferior quality.

Wheat Rises

Milling wheat for January delivery rose 0.5 percent to 269.25 euros ($310.65) a metric ton at 4:13 p.m. in Paris. Wheat for delivery in November next year, after the 2013 harvest, advanced 0.3 percent to 243.50 euros.

Rouen is Europe’s biggest cereal-shipping hub, and accounted for 41 percent of France’s grain exports by sea in 2010-11, port data show. That compares with a share of 17 percent for La Pallice on the Bay of Biscay and 11 percent for Dunkirk on the North Sea.

Senalia loaded 4.7 million tons of grains in 2010-11, of which 80 percent was wheat, according to the company’s website. Algeria and Morocco accounted for more than 65 percent of grain loaded at the company’s terminals for shipping outside the European Union.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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