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Published May 07, 2012, 09:19 AM

CBOT expands hours

Area grain elevator officials are evaluating the effect expanded hours at the Chicago Board of Trade will have on their operations.

By: Jonathan Knutson, Agweek

Area grain elevator officials are evaluating the effect expanded hours at the Chicago Board of Trade will have on their operations.

“We think it will have a big impact,” says Kathy Zander, executive director of the South Dakota Grain and Feed Association, which represents grain elevator firms and other agribusinesses involved in the grain, feed and farm supply business.

But elevator managers in her state need to assess expanded hours and decide how their elevators will respond, she says.

The CBOT is a key player in the global grain trade. Daily trading there has a huge influence on prices paid by elevators.

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, also says more time is needed to assess the expanded hours.

“Superficially, that (expanded hours) would seem to add more complexity,” but it’s too soon to say how elevators in his state might respond, he says.

Steve Strege, executive vice president of the North Dakota Grain Dealers Association, says he doesn’t know what impact expanded hours will have.

But area grain elevators already make extensive use of technology, which should make the transition easier, he says

Krista Lee Evans, executive director of the Montana Grain Elevator Association, says the question of how grain elevators will be affected should be directed to them individually.

The CBOT announced May 1 that expanded electronic trading hours for grain and oilseed futures and options will begin May 14. Market access to CBOT corn, soybeans, wheat, soybean meal, soybean oil, oats and rough rice futures and options will be available 22 hours per day on CME Group’s CME Globex, an electronic trading system for futures and options.

Beginning May 13 for trade date May 14, customers will have access to CME Globex from 6 p.m. to 4 p.m. (Central Time) Monday to Friday and from 5 p.m. to 4 p.m. Sunday to Monday.

The CBOT trading floor, sometimes known as “the pit,” will continue to trade during the same open outcry hours of 9:30 a.m. to 1:15 p.m. Monday to Friday.

Some publications, including Agweek, publish listings of elevators’ grain bids. The expanded CBOT hours could complicate the decision of when elevators will determine those bids.

Once the expanded CBOT hours are in place, grain elevators will decide individually, at least initially, when to determine their listed bids, says Paul Lautenschlager, manager of the Beach (N.D.) Co-op Grain Co. and president of the North Dakota Grain Dealers Association.

Over time, “some kind of norm” likely will emerge that grain elevators follow, he says.

Expanded CBOT hours will allow more trading immediately after key market data such as U.S. Department of Agriculture reports are released, says Bob Lebacken, president of RML Trading in Grand Forks, N.D.

Currently, some key reports are released before the CBOT opens for the day, which gives traders more time to analyze the reports. When the expanded hours are in place, traders will respond immediately to the reports, sometimes leading to “very reactionary” markets, Lebacken says.

His company already is using technology to stay in touch with markets and customers, which will help with the transition to expanded CBOT hours, he says.

ICE, an Atlanta-based exchange and clearinghouse, announced last month that it will expand its hours for grain contracts to 22 hours. CBOT’s expansion of hours is at least partly a response to that, Lebacken says.

Financial and energy markets already operate nearly continuously, he notes.

Another factor is that hedge funds and some other market traders have been pushing for expanded CBOT hours and more trading opportunities, according to published reports.