CME Group Inc. (CME), the world’s biggest grain market, plans to expand futures offerings in wheat on its Chicago trading floor on July 1 after closing the Kansas City Board of Trade following a buyout.
“We knew this was coming, but the news is still a little sad because it does mark the end of an era,” said Jason Britt, the president of Central States Commodities Inc. in Kansas City, Missouri. The last day of open-outcry trading in the Kansas City futures pit is set for June 28.
High-protein hard red winter wheat, used to make bread and other food products, trades on the 156-year-old Kansas City exchange and will add to CME Group’s contract for the soft red variety, used to make cookies, cakes and multipurpose flour. The shift is subject to approval from the Commodity Futures Trading Commission, Chicago-based CME Group said today in a statement.
CME Group, the world’s largest futures exchange, agreed on Oct. 17 to buy the Kansas City exchange for $126 million. The soft red contract has been trading on the CME’s electronic platform since Dec. 3. The company was formed by the acquisition of the Chicago Board of Trade by the Chicago Mercantile Exchange in 2007.
“The migration to Chicago should help to increase hedge- fund trading volumes in the hard-red wheat contract and improve spreading opportunities” between varieties, Britt said in a telephone interview.
On Dec. 10, CME began offering the implied spread between the two wheat grades.
Twelve firms were listed as clearing members of the Kansas City exchange on Jan. 22 including units of JPMorgan Chase & Co., UBS AG and Archer Daniels Midland Co. Floor space in Kansas City for CME Globex electronic trading will be open until the end of September, CME Group said.
The daily volume of Kansas City wheat futures and options averaged 20,818 contracts in January, up 16 percent from a year earlier, CME Group said today in a separate statement.
CME Group said volume on its agriculture futures and options averaged 1 million contracts a day in January, down 2 percent from a year earlier. The company’s CBOT unit offers corn, soybeans and rice, and its CME division trades cattle and hogs.
IntercontinentalExchange Inc. (ICE), based in Atlanta, is the biggest market for sugar, coffee, cocoa and cotton. The U.S. unit also offers grain and oilseed contracts.
To contact the reporter on this story: Jeff Wilson in Chicago at firstname.lastname@example.org
To contact the editor responsible for this story: Steve Stroth at email@example.com