Bloomberg News

U.S. Farmers Union Demands 30-Day Review of CME Trading Plan

May 18, 2012

The U.S. National Farmers Union asked the Commodity Futures Trading Commission to start a 30-day review period of extended trading hours by CME Group Inc. and Intercontinental Exchange Inc.

The moves to extend trading hours “have alarmed many of NFU’s members, many of whom are involved in the cash grains market,” NFU President Roger Johnson said in a statement on the group’s website. “Concerns regarding the volatile price swings that occur when U.S. Department of Agriculture reports are released have been voiced.”

Chicago-based CME, the world’s largest futures exchange, delayed plans to expand grain trading hours for the second time this month on May 16. Traders led by R.J. O’Brien & Associates and the two largest U.S. grain-handling organizations objected to CME’s changes because markets would be open during the release of USDA reports, increasing volatility and reducing their ability to make informed decisions.

Corn prices on the exchange have dropped 3.4 percent this year and soybeans are up 18 percent.

ICE, as the Intercontinental Exchange energy and agriculture marketplace is known, targeted CME by offering grain contracts for the first time on May 14 that trade 22 hours a day. Yesterday, CME said its Chicago Board of Trade will be open for trading from 5 p.m. to 2 p.m. Chicago time Sunday through Friday, or 21 hours a day after withdrawing an earlier plan for 22 hours. The CBOT currently allows trading 17 hours a day.

The USDA monthly crop reports are released at 7:30 a.m. Chicago time when grain trading has traditionally been halted. No date was set for the transition.

The Washington-based National Farmers Union represents about 200,000 farmers, ranchers and fishermen, according to its website.

The National Grain & Feed Association and the North American Export Grain Association, the two largest U.S. grain- handling organizations, also objected to CME’s shift to a 22- hour trading day.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net


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