The Moscow Commodities Exchange, responding to looser governmental controls over agriculture and changes in Russian foreign trade policy, has started trading wheat futures in a move that could ultimately change the way Russian farmers finance production.


The exchange, now the largest venue for dollar futures trading, will also offer the country's first sugar futures on Sept. 1, and plans to extend its wheat futures contracts next month from October to December, according to Vladimir Totsky, head of the exchange's commodities futures markets.


The new futures trading, however, has so far been greeted cautiously. Banks said the futures contracts would not necessarily help farmers obtain private loans and some traders said they would hold off from participating until the market grew larger.


The exchange's first attempt at setting up a grain futures market in Russia last year failed, as the market was too tightly controlled by the state. But since October, all restrictions on grain trading profits have been removed.


Yet the easing of government control has made the grain market extremely risky, especially for farmers. Futures trading, said Mikhail Grabov, head of the exchange's agricultural brokers' bureau, will provide some stability.


"Too many factors are now influencing the market," said Grabov, who has been trading wheat at the exchange for three years. "It is becoming chaotic and we especially need risk insurance."


Futures allow a farmer or grain buyer to lock in a sale or purchase at a specific price, providing more certainty of income and cash flow and often letting the farmer borrow money based on the contract.


Konstantin Mezentsev, deputy head of Russia's largest association of private farms and cooperatives, said Russian agriculture needed such a system a long time ago."Farmers will get at least some guarantee that they will get paid for their produce," he said, adding that the state had not paid about 20 percent of farmers for last year's crop.


He expressed hope that commercial banks would extend credits to the farmers more willingly when given a futures contract as a guarantee. At present, commercial banks are very reluctant to grant credits to farmers.


Totsky said the exchange was in talks with several commercial banks, trying to get their agreement to allocate credits to farmers for futures trading.


But an Inkombank representative, who spoke on condition of anonymity, said a futures contract would not make his bank any more willing to give credit to a farmer. "There is no guarantee the contract will be fulfilled," he said. "There is still no agricultural industry in the country."


But Totsky said that, according to exchange rules, both buyers and sellers had to deposit 10 percent of the contract price in an exchange bank, which would be returned after fulfillment of the contract. If either side backed out of the deal, the exchange would make good on the contract.


According to Grabov, sugar futures have become especially important since the country must increase sugar production after cutting imports from Cuba and Ukraine.


Totsky said that the British company E.D. & Man Group, one of the world's biggest sugar traders, had become a member of the exchange and would set up a brokerage to participate in trading.


Last month, the exchange introduced wheat futures for delivery in October and 36 brokerage houses now take part in trading four days a week.


At Thursday's wheat futures trade a ton of October wheat sold for 229,000 rubles, with a trading volume of 2,160 tons.


Melanie Kowalsky, director for the CIS of U.S. Wheat Associates, an American marketing and exporting company, said that at present the futures market here lacks the information network it needs to be effective. "Farmers in Rostov should have information about buyers in Vladivostok," she said. "But it's only the beginning."


Zlachevsky Arkady, chief manager of OGO, Russia's biggest grain trader, said the company would not take part in wheat futures until the amount of trade at the exchange reaches significant quantities. "We could ruin the market in five seconds, but we won't do this," he said, adding that OGO had become a member of the exchange and would set up a brokerage firm there.


Totsky said that the exchange also was considering plans to introduce futures for barley, sunflower oil and feed wheat.