What Traders are Talking About:
* CME Group announces expanded grain trading hours. As was widely expected, CME Group announced Tuesday that as of May 14, electronic trading hours for grain and soy futures at the Chicago Board of Trade will expand to 22 hours -- 6 p.m. to 4 p.m. CT Monday through Friday. Electronic trade Sunday and Monday will be from 5 p.m. to 4 p.m. CT. Open outcry hours will remain from 9:30 a.m. to 1:15 p.m. CT. Although electronic grain trading will extend to 4 p.m. CT, daily settlements will continue to be based on the 1:15 p.m. CT close each day. Also, futures and options contract expiration times will not change. "As we've grown our customer base in agricultural commodities around the globe, we've received increased interest in expanding market access by providing longer trading hours," said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments, CME Group. "In particular, customers are looking to manage their price risk in our deep, liquid markets during market-moving events like USDA crop reports. In response to customer feedback, we're expanding trading hours for our grain and oilseed products to ensure customers have even greater access to these effective price discovery tools."
The long and short of it: CME Group can spin this anyway they want, but this is nothing more than an attempt to keep up with the IntercontinentalExchange (ICE), which will launch 22-hour electronic trading of grain and soy futures starting May 14 and options May 15, pending final approval by the Commodity Futures Trading Commission.
* Day 1 HRW wheat tour results: record yield potential in central and northern Kansas. Scouts uncovered record yield potential and an advanced crop (around three weeks ahead of normal) in central and northern Kansas on the first day of the Wheat Quality Council annual HRW tour. The average yield on samples taken Tuesday was a tour record 53.6 bu. per acre, smashing the old high of 48.9 bu. per acre in 2005. Last year, the average yield on the first day of the tour was 40.0 bu. per acre. While yield potential is strong, some scouts are concerned with disease pressure in the areas sampled. Kansas State University extension agronomist Ken Shroyer Shroyer said, "The disease pressure really concerns me.This is the best the wheat is going to look right now. A lot can go wrong from here on out." Scouts will sample fields in western and southern Kansas today on routes from Colby to Wichita, where they are expected to see increased moisture stress in some areas.
The long and short of it: The record yield potential found in central and northern Kansas pressured wheat futures overnight. But traders are more interested in Day 2 results as scouts will sample fields in the heaviest wheat production areas of the state.
* Euro-zone PMI contracts. Euro-zone manufacturing PMI fell to 45.9 in April, down from 47.7 in March and the lowest reading since June 2009. PMI readings for Germany, Spain and Italy all dropped in April with the manufacturing sectors for all three countries remaining below the contraction level (50). While France's PMI increased last month, its manufacturing sector remains in contraction.
The long and short of it: Negative data out of the euro-zone is fueling more concerns about the economic stability of the region, putting pressure on the euro and supporting the dollar. The dollar strength, in turn, is a negative for commodities.
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