Forget the culture clash, the Chiefs-versus-Bears football debates and fierce arguments over who has the better beef.
When U.S. hard red winter wheat futures and options contracts begin trading in Chicago on Monday after a century-and-a-half legacy in Kansas City, the change may pass all but unnoticed, save for tweaks on wall boards displaying prices and a stray "take it!" shouted by one of a handful of transplanted traders.
At the Chicago Board of Trade, you see, the correct term to buy contracts is "sold."
Only a handful of the roughly three-dozen remaining Kansas City Board of Trade open-outcry traders will be moving 800 km northeast to trade the contract in person, too few to cause a stir in the cavernous CBOT floor.
In a stark illustration of the overwhelming dominance of electronic markets, the legacy of wheat trading that started on the banks of the Missouri River in 1856 will end with a whimper on Friday when the KCBT turns the lights out after the last shouts die down.
The contracts will re-emerge on Monday to trade in the same pits that have long housed Chicago's benchmark brand of the grain: soft red winter wheat, used to make pastries. The Kansas City variety, used to make bread, is grown on twice as much U.S. farmland as Chicago's brand, but volume for HRW wheat has long lagged behind its more liquid rival.
The only physical changes at the Chicago trading floor will be on electronic wall boards that list prices for contracts, said Tim Andriesen, managing director of agricultural commodities for CME Group, which owns the CBOT.
"I suspect on July 1 you'll walk in and, with the exception of some different locations on the wall board, it will all be pretty similar," he said.
For a few, CME's US$126 million takeover of the KCBT last year is opening new doors, offering the chance to join a more vibrant trading environment and to delve more deeply into options.
CME on Monday will launch options contracts on KCBT wheat futures that offer market participants new ways to trade the price difference between the three U.S. wheat markets, analysts said.
Options trader Dan Roemer, who will have the rare distinction of trading wheat in three different cities after starting his career at the Minneapolis Grain Exchange, says moving to Chicago from Kansas City is just the cost of staying current.
"Every industry evolves over time," he said. "This industry has now evolved as well. You change with it or you die."
He plans to live in Chicago during the week and return on some weekends to Kansas City, his home for the past 15 years. He leased a condo in downtown Chicago near Millennium Park, a popular tourist attraction.
Another KCBT trader, who didn't want to be named, moved to Chicago this spring, bunking in a friend's spare bedroom.
The CBOT offers an array of different products for traders, such as corn and soybeans, and different kinds of options, while the KCBT trades only hard red winter wheat futures and options.
"I'm basically becoming more diversified," said the trader.
For most KCBT floor traders, there was little question of moving. Not only do family ties run deep, but dwindling trade in Chicago's own pits make for an uncertain future. Open-outcry trading now represents only about one per cent of total trading in CBOT's benchmark wheat futures contract, down from five per cent four years ago.
More typical is open-outcry options trader Markus Groebner, who will move into an office in Missouri to trade the wheat contract electronically come Monday. The KCBT floor itself will become an electronic trading center until the end of September, from which Kansas City-based traders can execute trades.
Like so many other traders who have lived through the closure of one trading pit after another, those in Kansas City rued the likely loss of information that can be gleaned from standing for hours in a shouting mass of people.
"It's not just a financial marketplace, but it's an information marketplace where people can sort things out," Groebner said about the trading floor.
Groebner hopes to replicate the experience of the floor somewhat by sharing his new office with a group of about 10 traders who deal in a variety of markets.
New language, faster pace
The few KCBT traders who are uprooting their lives will need to adopt new trading terms and keep up with a faster pace.
An average of roughly 85,000 wheat futures contracts trade in Chicago each weekday; in Kansas City it's been closer to 32,000 contracts per day for futures and options combined, according to CME data.
The change also has meant job losses for some back-office and clearing staff of trading companies in Kansas City.
ADM Investor Services was among those that reduced its headcount, said Scott Smith, a vice-president for the company. He was transferred to an ADM office in Overland Park, Kansas, from the building near Kansas City's historic Country Club Plaza shopping district that housed the KCBT trading floor.
The floor was unusually crowded on the final day as former traders, grain dealers and their customers came to share memories of the KCBT. Many stuck around to see the last settlement, said Bart Vance, the managing director for Atlas Physical Grains, who was among the visitors.
"It was like you turned back the hands of time with a lot of guys standing on the floor," he said. "A lot of people are connected to this building and to this contract that wanted to wish it well and send it off into the sunset."
-- Tom Polansek
reports on ag futures markets for Reuters from Chicago.
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