On Second Thought, CME Now Wants 21-Hour Grain Trade

06:23AM May 17, 2012
( )

What Traders are Talking About:

* On second thought. Amid pressure from the grain industry and local traders, CME Group has reportedly withdrawn its proposal for 22-hour grain trading and filed new paperwork with the Commodity Futures Trading Commission (CFTC) to expand to a 21-hour business day for electronically traded grain/soy futures and options. Under the new proposal, grain trade at the Chicago Board of Trade would operate from 5 p.m. to 2 p.m. CT Monday through Friday. The Kansas City Board of Trade filed similar paperwork with CFTC, reportedly with a planned starting date of May 31. So far, there are no reports of the Minneapolis Grain Exchange taking the same steps, although that is widely expected to happen.

The long and short of it: While the new proposed hours may be a little more friendly, they still don't solve the issue of grains being open when USDA releases its month crop reports. With it now appearing grains will close at 2 p.m. CT, there is some speculation USDA may be encouraged to move its report releases to that time. USDA Secretary Tom Vilsack said earlier this week his agency is still studying what would be the best time for report releases.

* Quality or price? China will auction 600,000 MT of state-owned soybeans May 24, according to China National Grain and Oils Information Center. In total, China is reportedly planning to sell up to 3 MMT of older stocks (2008-2010) stored in Hebei, Heilongjiang, Zhejiang, Jiangxi, Shangdong and Inner Mongolia. While the offering prices will be cheaper than imported soybeans, quality concerns may limit interest from crushers, especially since there are plenty of high-quality imported soybean supplies currently stored at ports.

The long and short of it: Results of this initial offering of older soybean stocks should be very telling as to what Chinese crushers favor -- quality or price. Most expect it to be quality.

* Wheat crop concerns mount. Wheat futures staged a strong, almost improbable, rally Wednesday amid growing crop concerns in the U.S. and around the world. The concern here is in the Southern Plains, as recent hot, dry and windy conditions are not what the rapidly maturing HRW crop needs. But the concerns are not limited to the United States. Russia (and other areas of the Former Soviet Union) are also suffering from dryness concerns, as are parts of Australia.

The long and short of it: Wheat crop concerns are price-positive short-term, but given ample domestic and global supplies, the corrective rally in the wheat market should be viewed as a selling opportunity.


Follow me on Twitter: @BGrete

Need a speaker for a seminar or special event? Contact me: [email protected]