Tuesday, the wire service Reuters reported that CME Group, which recently expanded electronic trading hours, may be looking for some tweaking to those hours, or an expansion of pit trading hours. In addition there are questions of how to handle a USDA report when it is released. Currently, the information presented on report days is a lot to digest during a trading session, traders have said.
According to the report, CME Group may be polling some members to get a sense of what people are seeking. There is talk of having the the pit stay open until 2 p.m. settling at the same time the new expanded trading ends as well.
As for those USDA reports? There is speculation that report times could change as early as the June 12 report. Those reports used to come out in the afternoon, but have been released ahead of the pit open for some time. Secretary of Agriculture Tom Vilsack has been quoted saying that the agency is analyzing different approaches in light of the new hours.
Reuters also reports - see story - that any change USDA makes will come after a public comment period, which probably means the June reports will come out at their usual 7:30 a.m. times while the market is open.
With those electronic trading hours which last from 5 p.m. to 2 p.m., settlement prices come at 1:15 p.m. "Continuation of electronic trade, where roughly 90% of the volume is contained, for 45 minutes beyond when settlement prices are determined, creates a great deal of confusion over prices that the elevators should offer to farmers," says Arlan Suderman, market analyst, Farm Futures. "Some elevators are posting prices at 1:15 CDT and then immediately taking protection when futures prices slide from that level."
Suderman explains that elevator managers would like a single settlement time that coincides with the end of electronic trading. "As such, many are pushing for a 2 p.m. close of pit trade," he says. "Meanwhile, option traders are reportedly pushing for pit trade to open at 7:20 a.m. to allow them to trade through USDA crop reports. Regular futures traders would like the pit closed during USDA reports, which could be achieved if USDA were to delay its release time to after 2 p.m.
"The bottom line out of all of this? Farmers and cash grain brokers lost confidence in the futures market as an effective risk management tool when the MF Global fiasco occurred. The failure of the exchange to thoroughly seek comments from stakeholders prior to implementing expanded trading hours has further deteriorated confidence in CME Group," Suderman concludes.