CME Will Reduce Grain Trade Hours After Customer Survey

CME Group Inc., the world’s largest futures exchange, said it plans to scale back grain and oilseed trading hours next month, backing off an expansion last May that left markets open 21 hours a day.

Trading for Chicago Board of Trade and Kansas City Board of Trade contracts will be cut to 17 1/2 hours a day starting April 8, pending approval from the U.S. Commodity Futures Trading Commission, Chicago-based CME said today in a statement. The company said in January that it would seek customer feedback on the extended hours. More than 4,000 people replied to a survey on the issue, CME said.

Electronic trading of contracts including corn, wheat and soybeans will be open Sunday to Friday from 7 p.m. to 7:45 a.m. Chicago time, the exchange said. There will be a break in electronic trading from 7:45 a.m. to 8:30 a.m., before floor trading begins and electronic trading resumes, until settlements at 1:15 p.m.

“It’s going to add that element of people gearing up for the open in the morning that the markets have been missing,” Jon Marcus, the president of Lakefront Futures and Options, LLC in Chicago, said in telephone interview. “It will put that extra zip into the markets, and that’s going to benefit everybody. This will also give everybody a break.”

The CME expanded grain trading to 21 hours from 17 partly to compete with new contracts offered by Intercontinental Exchange Inc. 22 hours a day.

Dominant Location

The CBOT, where grain has been exchanged since 1877, remains the dominant location for trading. The exchange handled 73.2 million corn futures contracts in 2012, down from 79 million in 2011, CME data show. Soybeans trading rose 15 percent to 52 million contracts last year, while wheat volume rose 13 percent to 27.4 million.

ICE handled 464,155 corn, wheat, soybean, soybean-meal and soybean-oil futures in 2012, since starting in May, exchange data show. The biggest month for ICE was 84,024 contracts in July. During that same month, CME handled 18.09 million.

Significant Feedback

“Over the past several months, we have received significant customer feedback about the current CBOT grain trading hours,” Tim Andriesen, managing director for agricultural commodities and alternative investments at CME, said in the statement. “While there were varying opinions about what the modifications to hours should be, we believe these changes balance the needs of our diverse global customers.”

In their Jan. 29 letter to customers, CME Executive Chairman Terrence Duffy and Chief Executive Officer Phupinder Gill said they were considering a trading “pause” during market-moving reports at noon in Washington from the U.S. Department of Agriculture, “if all exchange and trading venues would do the same.”

“USDA has no plans at this time to change the release of its key economic reports,” Gerald Bange, the chairman of the USDA’s World Outlook Board, said in a telephone interview.

“Our commercial hedgers were a little disappointed by the reduction in hours because the longer hours allowed them to hedge cash-market trades almost immediately, reducing market risks,” David Smoldt, a vice president at INTL FCStone Inc. in West Des Moines, Iowa, said in a telephone interview. “Markets still will be open during USDA reports. It would be easier to have the USDA release the market data when the markets are closed, so everyone has time to review the information, and maybe there would be less price volatility.”

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