CFTC allows CME to open grain pits early for crop reports

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CHICAGO - The Commodity Futures Trading Commission (CFTC)approved the Chicago Board of Trade's (CBOT) plan to start open-outcry grain trading early on days the U.S. government issues major agricultural reports, a commission spokesman said on Monday.

CME Group, owner of the CBOT, told the CFTC it wanted to start pit trading at 7:20 a.m. CDT (1220 GMT), instead of the traditional opening time of 9:30 a.m., when the U.S. Department of Agriculture issues major reports.

The CFTC did not object to the change after a 10-day review of the plan ended on Friday, the spokesman said.

The change will take effect on Tuesday, when the USDA is due to issue crop reports at 7:30 a.m. CDT.

It will be the first time that markets are open for a key USDA report, raising concerns that volatility could spike as traders scramble to digest the data as quickly as possible. Formerly, traders had two hours to review the reports before pit or electronic trading began.

Floor traders pushed for the early start to pit trading on USDA report days after CME implemented a nearly non-stop electronic trading cycle for its grain markets last month.

Options traders on the CBOT floor, who are responsible for much of the volume in grain and soy options, worried they would miss out on business if electronic trading was open when the USDA reports were issued while the pits were closed.

"Just to keep themselves in the game, they are going to have their open at 7:20 tomorrow morning so that they will be able to trade the report like everyone else when it come out," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage, about floor traders.

CME prepared market participants for the change on Friday by issuing notices that said pit trading would open early on Tuesday, pending CFTC approval.


The change is the latest in a string of adjustments to the trading cycle by CME following new competition from rival IntercontinentalExchange.

CME said on Friday that starting on June 25 pit trading will stop at 2 p.m. CDT Monday to Friday, instead of the current 1:15 p.m. close, synchronizing the close with that of electronic trading.

CME expanded the electronic trading cycle to 21 hours per session last month from 17 hours, changing the end of the electronic session to 2 p.m. from 1:15 p.m., after ICE launched look alike electronically traded corn, wheat and soy contracts on a 22-hour basis.

Following the increase in electronic hours, farmers and grain elevator managers said it was difficult to know what price to use to set cash grain prices at the end of the day.

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