CBOT Changes 2012

On May 13th, the CME, which owns the Chicago Board of Trade extended the electronic grain trade to 22 hours a day. This trade begins at 5:00 pm and closes at 2:00 pm the following day. Therefore it’s week starts on Sunday at 5:00 pm and closes the week at 2:00 pm Friday. In the past this was known as the overnight trade as it ran from 6:00 pm to 7:00 am. The trades are done by computers as there no “live bodies” involved such as the commodity pits. The electronic trade has grown immensely in volume as traders like imputing the trades and the computers take it from there. In the past, this session was used primarily by foreign traders, hedgers, and speculators. Now with the extended hours this trade will be used by terminals and companies like SFG to give producers more opportunities to price their grain. The live pit and the electronic bids run close most days; however, the electronic responds faster and settlements are quicker. Currently the live trade is still running from 9:30 to 1:15 on market days. However, a proposal is pending to extend this to 2:00 pm to match the electronic close. This would help eliminate most of the confusion that has happened in the first week with 2 closing times.

So what does all this mean to SFG and our grain customers? We will no longer have a morning spot bid like we have had in the past. We will now buy grain from 8:00 am to 2:00 pm on days the market is open using an instant bid. This means you will need to call us to get the current price and it will be a take or leave price as the market will be open and moving. This price will be determined by the movement of the market compared to the previous days close. We will still have an afternoon spot price that we hope to post by 3:00pm, and it will be good till 4:00pm. We must cut off the purchases at this time to allow us time to make our sales before the terminals start closing at 4:30pm. We realize that this new format will necessitate some changes on the way we handle the spot grain we receive during harvest. We will have more information for you in the coming months.

Should you have any questions about this or grain marketing in general, call me at the Knoxville office, 641-828-8500.