CME Group imposes rare halt on wheat futures trading

Chicago | Reuters –– CME Group briefly halted electronic trading in U.S. wheat futures overnight on Thursday, after prices sank 1.6 per cent in one second as concerns about Russian export curbs roiled the market.

The 10-second pause represented only the fourth time this year that the world’s largest futures exchange operator has interrupted trading in its grain markets as part of a so-called “stop logic event.” Such a halt is designed to slow extreme price moves to allow liquidity to form.

CME Group stopped trading in the most-active Chicago Board of Trade March wheat contract at 3:49:37 a.m. CT, company spokesman Chris Grams said. Charts show prices sank to $6.54 a bushel from $6.64-3/4 a bushel during that second. Ten seconds later, the market re-opened at $6.55 a bushel.

Trading was volatile due to uncertainty about the impact of export restrictions in Russia, a major wheat trader. Russia is restricting grain exports to try to cool domestic prices as it tackles a currency crisis linked to plunging oil prices and Western sanctions.

Traders said stop logic events typically occur in thinly traded markets when major news events are driving prices.

The pause “lets the liquidity come back,” said Tom Grisafi, a risk manager for Advance Trading, who had bids in the wheat market when activity was halted.

At CME Group, “their computers are fast enough to know that something is not right so they just halt it,” he added.

The exchange operator previously implemented stop logic events in wheat futures on March 31, in soybean futures on July 16 and in mini-soybean futures on Aug. 12, according to the company. Stop logic events are more common in precious metals markets, traders said.

— Tom Polansek reports on ag commodity markets for Reuters from Chicago.

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