10/31/06 Chicago Merc buying Board of Trade

Farm and Ranch October 31, 2006 Chicago Mercantile Exchange Holdings, Inc., announced last week that it is purchasing the Chicago Board of Trade for $8 billion. The combined company would be called CME Group, Inc., and is expected to create significant cost efficiencies for customers and exchange members. The combined company will have an average daily trading volume of about 9 million contracts representing about $4.2 trillion in notional value. It will be one of the world's largest trading complexes including agricultural commodities like grains and the largest electronically traded agricultural futures contracts complex. Some market watchers say the merger means an end to the "open outcry" system of trading. Market Analyst Darrell Holaday with AMC in Manhatten, Kansas , says the "open outcry" was likely to be phased out anyway. Holaday: "The merger, this acquisition will speed that process up and the "open outcry" will be a thing in the past." Holaday doesn't see much impact on agricultural commodities trading. Holaday: "I would stress that in the end producers have adjusted to many changes over the years and I don't think it is a big deal. I will say this. I would be concerned as to whether there are any changes in the way the contracts are written and delivery specs and things like that and position limits. What affects those things, then certainly producers would be impacted by this." The CME's purchase of the Board of Trade is expected to be finalized in 2007. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.