Computers silence a Kansas City trading floor
The CME Group will move wheat trading from Kansas City to Chicago in June.
Since 1856, wheat has been traded on the floor of the Kansas City Board of Trade. In the old days, there would be a swarm of traders around the pits, shouting orders, making those crazy hand signals you've seen in the movies, but that will end later this summer.
Parent company CME Group (Chicago Mercantile Exchange) announced on Monday that it will move all wheat trading to Chicago.
Joe Barker buys and sells contracts on the exchange for hard red winter wheat, the kind of wheat used to make bread. He's the branch manager of CHS Hedging, and his office is in the same building as the Kansas City Board of Trade. He’s just two floors above the trading pit. But Barker does almost all of his trades electronically.
“Taking care of that clerking function has really cleaned up the paperwork part of what we do, and that’s made us more efficient,” Barker says. “We can handle more customers and we can do it for lower costs, and it’s helped our customers. Their margins get better because we’re able to charge them less.”
In 2007, Barker says about 80 percent of his branch's trades were completed on the floor of the exchange. Now, it's less than 5 percent. That's the way the industry has been moving. Over the last decade, exchanges in Chicago, New York and Minneapolis have all closed or merged with larger exchanges.
In Kansas City, CME Group says June 28 will be the last day for trading wheat in-person.
Michael Braude, who was president of the board of trade from 1984 until 2000, notes that, “For 157 years, the Kansas City Board of Trade was an integral part of the community. I used to tell people when I would take them and give them a tour of the floor that it was the place in Kansas City where more money changed hands than any place else."
Now, that money flows from computer to computer in nanoseconds.
Jeremy Bernfeld is a reporter with Harvest Public Media.