Reduced Trading Hours Coming, But USDA Has No Plans To Change Report Times

March 6, 2013 12:20 AM

What Traders are Talking About:

* Exchanges to reduce grain trading hours. CME Group and the Minneapolis Grain Exchange announced plans for reduced trading hours starting April 8, pending approval from the Commodity Futures Trading Commission. Trading of grain and oilseed futures at the Chicago Board of Trade and Kansas City Board of Trade will be: electronic trading from 7:00 p.m. to 7:45 a.m. CT Sunday through Friday; a break in electronic trading from 7:45 a.m. to 8:30 a.m. CT Monday through Friday; and floor and electronic trading from 8:30 a.m. to 1:15 p.m. CT Monday through Friday. Daily settlements will be based on market activity "at or around" 1:15 p.m. CT each day. Mini-sized contracts of corn, soybeans and wheat will trade electronically and on the floor in Chicago until 1:45 p.m. CT. The only difference for HRS wheat futures options at the Minneapolis Grain Exchange is that they will trade until 1:30 p.m. CT daily, but the daily settlement will be based on trade around 1:15 p.m. CT.

The long and short of it: Grain traders hope the reduced hours will help "cure" some of the lull periods that are seen during the current 21-hour trading schedule. Some medium and smaller grain merchandisers are concerned about their ability to hedge risk late in the afternoon now that the start of overnight trade will be pushed back to 7 p.m. CT.

* USDA will not adjust report times. While trading hours for grain and oilseeds will be adjusted in just over a month, USDA has no plans to shift the release time of its reports, which moved to 11 a.m. CT at the start of this year. World Agricultural Outlook Board Chairman Jerry Bange told USDA Radio, "At this point we have no plans to change our release. I think that the record will show the noon (ET) release has worked very well. The truth of the matter is I’ve gotten no complaints about it and it seems to be working very well now." This is consistent with what our sources signaled when talk of reduced grain trading hours first surfaced earlier this year.

The long and short of it: While USDA currently has no plans to change report times, there's likely to be a push for them to do so, especially since there will be a break in trading from 7:45 a.m. to 8:30 a.m. CT.

* Dow moves to new high, now what? The Dow Jones Industrial Average reached a new high of 14,286.37 and also posted a record-high close of 14,253.77 Tuesday, topping the previous high and high close that were each set in October 2007. Even prior to the Dow making a new high yesterday, there was talk of Dow 15,000. But before the exuberance gets overblown, it's important to examine how we got to this point. Conditions under which the Dow hit a new high yesterday are much different than they were in 2007. In 2007, everything was very rosy, though the country was unknowingly at the time in the beginning stages of a major recession. Currently, the stock market is climbing a "wall of worry" as the euro-zone debt crisis continues to linger and the U.S. remains at an impasse on its budget issues, though there seems to be reduced risk of a double-dip recession. Also consider: gas prices are $1 per gallon higher now than they were in 2007; the unemployment rate is double what is was then; the Fed balance sheet is 3.5 times larger than in 2007; U.S. debt as a percent of GDP is double; consumer confidence is down 30%; GDP is 0.9% lower; and the U.S. deficit is 10 times greater than in 2007.

The long and short of it: Bulls say the Dow is rallying in spite of the current economic conditions, indicating attitudes are extremely bullish and there's more upside potential. Naysayers feel the current rally in the stock market is a "house of cards" and will soon crumble.


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