Milling & Baking News - May 29, 2012 - 49

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New electronic trading hours bring some confusion

xpanded electronic trading hours for wheat futures and other Central states agricultural contracts generated Minneapolis, Truck some confusion last week with grain Kansas City $200 producers, merchants and end users seeking to determine the best approaches to conducting business given what were $150 widely viewed as competing daily “closing prices” in agricultural futures. $100 Under the new electronic trading June Aug. Oct. Dec. Feb. April regime that began last week, electronic 2011 2012 trading hours run from 5:00 p.m. Central time to 2:00 p.m. After a three-hour pause, Indexes trading for the next business day begins at 5:00 p.m. Meanwhile, open-outcry Saltine Cracker Ingredients trading in the wheat pits of Kansas City 250 and Chicago continued its longstanding schedule, beginning at 9:30 a.m. Central 220 time and ending at 1:15 p.m. The exchanges continued to post settlement prices reﬂecting the 1:15 190 p.m. close of open-outcry trading, but those settlements could not reﬂect price 160 movements in electronic trading during the next 45 minutes each day. This raised 130 the question whether business based on June July Aug.Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May use of futures closing prices should use Bagel Ingredients the 1:15 p.m. settlement prices or the 2:00 p.m. ﬁnal prices in the electronic 380 market. As the week wore on, it seemed more businesses relied on the 2:00 p.m. 335 electronic trading last trade prices. The consensus of pit traders and 290 many other market participants seemed to be the open-outcry hours 245 should be extended to 2:00 p.m., so both electronic and pit trading once again end at the same time. Many 200 June July Aug.Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May traders assumed the CME would advise the Commodity Futures Trading Price Indicators Commission it wanted to extend the 2 3 THIS LAST WEEKS WEEKS open-outcry session to 2:00 p.m. Instead, the CME Group on May 24 WEEK WEEK AGO AGO sought approval to extend the openPan-bread ﬂour outcry hours in the other direction, to an Wheat futures, earlier start to the session, on days when K.C., July critical U.S. Department of Agriculture Hard winter supply-and-demand, crop production, premiums, acreage and grain stocks reports are 12.2% protein issued, beginning June 12. Millfeed, K.C., That would address another problem 30-day with the expanded electronic trading Soybean oil hours, which was previously, U.S.D.A. Cane sugar reports were issued when no trading, Cocoa electronic or pit, was going on, and if
$250

electronic trading was open during the release of the reports while the openoutcry pits were closed, some traders, particularly options traders, would be put at a disadvantage. The CME Group said on May 25 that beginning June 12, open-outcry trading on days critical U.S.D.A. reports are released will begin at 7:20 a.m. Central time, pending C.F.T.C. approval. The U.S.D.A. reports are released at 7:30 a.m. Central time. On other trading days, the

traditional 9:30 a.m. to 1:15 p.m. openoutcry schedule would be observed. The dates in 2012 on which open-outcry trading would begin at 7:20 a.m. would be June 12, June 29, July 11, August 10, September 12, October 11, November 9 and December 11. It was unclear as of this writing why the CME Group refrained from seeking an extension in open-outcry trading to 2:00 p.m. Some suggested it was pressed to meet the deadline for requesting approval of an early open for openoutcry trading on June 12 (the C.F.T.C. has up to 10 days to indicate its approval or disapproval to such a change) and gave that request priority. Others suggested there may be disagreement at the CME Group over whether an extension in open-outcry hours to 2:00 p.m. should be sought.MBN
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Milling & Baking News - May 29, 2012

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