The colour used for Wizard of Oz was Technicolor's 3-strip process, developed in 1929. Disney acquired a two year exclusive license for it, meaning everyone else was stuck with the two-strip process (i.e. colour still existed prior to 1929, it just wasn't very good). The 1932 cartoon Flowers and Trees was the debut of the 3-strip process.
The first live action film to use the 3-strip process was The Cat and the Fiddle in 1934 (which was an MGM production...the same studio that made Wizard of Oz), and the first movie to use it throughout the entire production was Becky Sharp. Wizard of Oz came out in 1939, 5 years after the colour technology it used was first scene by audiences, 10 years after the technology had been developed.
Somehow I can't see Wizard of Oz being in development for 10 years (the script was completed in 1938, the same year the Snow White, another colour movie, came out).
To reiterate, the colour technology used in Wizard of Oz did NOT come out during the production of the movie.