ICE abandons attempt to unseat CME in grain futures

Intercontinental Exchange is pulling the plug on US corn, wheat and soyabean futures products after an unsuccessful attempt to storm Chicago’s fortress of grain trading.

The exchange operator said in a notice Friday that it would cease listing new contracts on the agricultural commodities and delist all of those without any open interest. That accounted for all but one, the ICE August soyabean futures contract, in which a total of four contracts remain outstanding.

ICE launched the grain and oilseed futures and options in 2012 in a bold gambit to break into a market controlled by Chicago-based CME Group and its predecessor exchanges since the 19th century. The move broke a taboo because ICE allowed trading for 22 hours a day, including during the release of market-moving crop reports from the US Department of Agriculture.

CME’s Chicago Board of Trade had traditionally paused action during the reports to allow traders to digest the data held within. After ICE’s foray it relented and expanded its trading hours. The USDA subsequently changed the release times of its crop reports to midday so they would coincide with times of highest volume.

ICE’s corn, wheat, soyabean, soyabean oil and soyabean meal contracts were “lookalikes” that tracked the price moves of CME’s futures. But they never caught on, another example of the adage that liquidity begets liquidity in futures markets.

Meanwhile, CME grain markets have been booming. This week the company announced that open interest in its corn futures had surpassed 2m contracts.

The last remaining ICE grain and oilseed contracts are canola seed futures, inherited with its acquisition of the Winnipeg Grain Exchange in Canada, and a thinly traded feed wheat contract listed on its London futures bourse.