Market Matters Blog
Katie Micik DTN Markets Editor

Monday 12/03/12

CME Completes KCBT Acquisition
CME Group completed its acquisition of the Kansas City Board of Trade on Monday, making it the owner of the world's two benchmark wheat futures contracts.[Read Full Blog Post]
Posted at 10:29AM CST 12/03/12 by Katie Micik | Post a Comment
Comments (3)
Do any readers have a view on the independent Minneapolis exchange? Is there any reason management of MGEx should not seek a buyer?
Posted by THOMAS FARLEY at 1:11PM CST 12/03/12
That's a great question. ICE's grain contracts haven't taken off, and this acquisition brings three (SRW, HRW, Black Sea) wheat futures contracts under one roof. KCBT Executive Vice President Jeff Borchardt said it makes "CME Group a comprehensive marketplace for the global wheat trader." Executing a KCBT-CBOT wheat futures spread will be simplified into a single trade instead of legging into each contract. But what baker would really like would be a simple MGEX-KCBT spread that would allow them to hedge protein. Is that direction MGEX is heading?
Posted by KATIE MICIK at 1:54PM CST 12/03/12
It seems to me that Minneapolis is being held hostage by its executives. Without a merger the MGEx will become irrelevant. Even now the Minneapolis wheat contract is unavailable on popular platforms like Interactive Brokers. Further, the Minneapolis exchange should be attractive to the ICE (which has struggled to get a viable wheat contract going) and/or to Euronext (which has active wheat contracts in Paris and London) as well as to the CME... At a current value of around $30 million excluding real estate, the market is saying that the current management of the MGEx is likely to drive it into the ground.
Posted by THOMAS FARLEY at 9:42AM CST 12/04/12
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