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New trading hours jostle trade

Updated: 05/23/2012 @ 8:00am

The jury is still out. But, how the new extended grain trading hours will impact the way farmers follow the markets and how analysts help their farmer-customers keep up is still being discussed.

After Monday and Tuesday's 21-hour electronic trading days vs. the old 17 hours per day, the biggest change for this reporter has been adjusting to the posting times of the settlement prices.

On the CME Globex platform, trading occurs from 5:00 p.m. to 2:00 p.m. CT Sunday to Friday.

Products included in the expanded hours are CBOT Corn, Mini-Sized Corn, Soybeans, Mini-Sized Soybeans, Wheat, Mini-Sized Wheat, Soybean Meal, Soybean Oil, Rough Rice, Oats, and Ethanol futures and options plus all related calendar spread options and inter-commodity spread options.

Daily settlements will continue to be based on market activity at or around 1:15 p.m. CT each day. Additionally, open-outcry trading hours will continue to operate from 9:30 a.m. to 1:15 p.m. CT Monday to Friday.

But, finding the settlement prices, after the first day of the new trading hours, was a bit challenging. Under the old trading hours, a visitor to Agriculture.com would see the settlement prices in the Commodity Prices section around 1:45pm. However, the first day of the new trading schedule displayed the electronic trading prices until 2:00pm CT.

On the second day of the new trading hours, the pit floor closing settlement prices appeared earlier than the first day.

Does it matter? Well, the Tuesday electronic closing price for July corn futures was 5-cents higher than the official pit settlement of $5.97 per bushel. I'm confident the system will work its way out.

Market-watchers are still assessing how their daily work will chug.

Ray Jenkins, a Cargill grain buyer, says there is great anxiety about publishing bids based on the 1:15pm price or what it shows at 2:00pm.

"The settlement in that 45-minute session actually reverts back to what it was at 1:15. This has been going on all the time in the meats and gold where you have a blended trade that's part open-pit and part electronic. So, if nothing changed, the first tick at 5:00pm probably should represent the electronic close. But, here's the difficulty for big organizations like us with all sorts of stuff tied to the 1:15 close: They are using the 1:15 price to calculate margin exposure and all that kind of stuff. We'd have gladly lived at cranking it back to 4:00pm," Jenkins says.

Tim Hannagan, PFGBest.com senior grain analyst, says the new trading hours are not customer friendly.

"Under the old schedule, everything was set up to trade a certain way which allowed us time to regroup and contact customers on what to do next. With out downtime, it becomes a professionals market, one that can sit in front of the screen. But, those who are distant will be at a huge disadvantage. We will have to adjust but it's clearly not customer-friendly," he says.

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21 hour trader 06/03/2012 @ 6:04pm The markets and customers will adjust to the new trading hours. They have to. I worked in the 30 Year Treasury Bonds when the electronic markets first started. There will be some growing pains, but, the most important thing about the new hours is that the market will be open during market reports. That will bring new opportunities for those for those that know how to use the markets electronically. Good Luck

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