21-Hour CBOT Grain Futures Trade Starts

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Chicago Board of Trade (CBOT) grain futures began trading expanded hours on Sunday evening after the Commodity Futures Trading Commission on Friday granted fast approval to a new proposal for 21-hour trade from CME Group Inc. the CBOT's parent company.

CME Group Inc. on Thursday submitted the new plan to the CFTC on Thursday after pulling a previous proposal for 22-hour/day trade in response to concerns from grain industry groups. Under the new plan, CBOT grain, soybean and ethanol futures trade will be halted for three hours each day Monday through Friday, from 2 to 5 p.m. CST. The prior plan included only a two-hour break, from 4 to 6 p.m.

The new plan is partly the result of collaboration between CME Group, the National Grain and Feed Association (NGFA) and the North American Export Grain Association (NAEGA), CME said in a statement, which included backing from the NGFA.

"This action by the CME Group demonstrates the value of collaboration between the exchange and users of futures and options markets who rely heavily on the [Chicago Board of Trade] contracts to hedge marketplace risk," NGFA acting President Randall Gordon said.

The NGFA had voiced concern about CME's original plan, saying the two-hour break did not give grain merchants enough time to reconcile their trading accounts and "perform other required accounting and back-office operations" without adding to staffing costs.

The new plan still does not address concerns that important USDA reports will now be released while grain futures are trading, which could boost market volatility and put small traders at a disadvantage.

In its notice to the CFTC for the new plan, CME noted that agricultural products traded on other designated contract markets will be available for trading when USDA reports are released. "Consequently, the Exchange has decided that it is fair and reasonable to revise its rules to introduce trading during times that USDA reports are released."

 

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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