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Corn+Soybean Digest

Market News

CBOT Adds Electronic Ag Futures

The Chicago Board of Trade (CBOT) announced that on Aug. 1, it will begin daytime electronic trading of its agricultural futures contracts for the first time in its 158-year history.

The exchange said it will offer daytime trading on its e-cbot electronic trading platform for standard-sized wheat, corn, oats, soybean, soyoil, soymeal and rough rice futures “side-by-side with CBOT open auction markets.”

At present, CBOT conducts electronic trading of its agricultural contracts only during overnight sessions.

CBOT President and Chief Executive Officer Bernard W. Dan said in a statement that the move to daytime electronic trade was driven by strong customer demand.

The move is viewed by market watchers as an attempt to boost profits for shareholders by the exchange, which became a publicly traded company last October.

A similar move to daytime electronic trade was made in 1998 by CBOT in its financial futures markets. That move boosted trading volume but led to a loss of floor traders as trading moved to the screens. At least 80% of all global futures and options contracts now trade electronically.

That has some people fearing that the move will ultimately mean the end of open outcry trading at CBOT. However, CBOT officials say there are no plans to close the trading floor.

"There are no plans to move this business from the hybrid model," says CBOT Chairman Charles Carey in a conference call with reporters after the announcement. "We are going to support both open-auction trading as well as electronic trading. We believe that creates the best environment and the greatest liquidity pool for all of our users."

While electronic trading technology is improving, more complex transactions such as spreads and options trades are still difficult to execute electronically. Agricultural options will trade electronically only at night.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.

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