On Tuesday, the CME Group announced that it will reduce grain and oilseed trading hours to 17.5 hours from 21 hours. This comes after last year’s largely controversial expansion, which got significant backlash from traders, brokers and agricultural companies alike.
Managing Director of Agricultural Commodities and Alternative Investments at CME Group, Tim Andriesen stated that “Over the past several months, we have received significant customer feedback about the current CBOT grain trading hours. While there were varying opinions about what the modifications to hours should be, we believe these changes balance the needs of our diverse global customers based on their feedback” [for more commodity news and analysis subscribe to our free newsletter].
Timing Matters
Perhaps one of the biggest criticisms of the current trading hours is that the schedule has become bloated, leading to increased costs for grain traders. In addition, periods of low volume and low liquidity throughout the longer hours makes for highly volatile trading, as traders struggle to establish and exit positions.
When the CME had expanded its hours last year, largely in response to its competitor IntercontinentalExchange Inc.’s decision to start offering trading in popular agricultural contracts, it meant that trading would be active when critical U.S. Department of Agriculture crop reports were released. Many argued that this did not give enough time to sort through and digest the data, triggering wild price trades in live trading. The USDA, however, stated that it has no plans to change the timing of its data releases [see 3 Reports Every Commodity Trader Should Know].
And while this issue still remains a top concern, most are happy with the CME’s plans for its new schedule as they believe it will give traders sufficient and much needed breaks throughout the day.
The New Schedule
Beginning April 8, 2013, trading hours for CBOT Corn, Soybeans, Wheat, Soybean Meal, Soybean Oil, Rough Rice, Oats, and KCBT Wheat Futures and options (as well as any related spread options) will be as follows [see How Ags Will React to Last Year's Drought]:
- Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT
- Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT
- Monday to Friday, floor and CME Globex trading from 8:30 a.m. to 1:15 p.m. CT
The new schedule gives traders a 45 minute break in the morning before pit trading begins and also cuts afternoon hours.
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Disclosure: No positions at time of writing.
