USDA to keep releasing crop reports during CME trading hours, despite complaints -official

Reuters

By Christine Stebbins

CHICAGO, Oct 21 (Reuters) - A top U.S. AgricultureDepartment official said key monthly U.S. crop reports willcontinue to be released during CME Group Inc tradinghours, despite complaints from the grain industry thathigh-speed traders have access to the data before it becomesavailable on public websites.

"This business of the markets being open during the releaseof the reports is not going away and will stay with us for awhile," Gerald Bange, chairman of the U.S. Department ofAgriculture's World Agricultural Outlook Board, told a group ofagricultural economists and traders at a meeting in Chicago onMonday.

Since last year, when the USDA began releasing its keymonthly crop reports while the CME grain markets were open,hedgers have complained bitterly that high-speed traders armedwith algorithms and super-fast data feeds have distorted theprice discovery function of the markets. Previously, the reportswere released when the markets were closed.

On the sidelines of the industry meeting between USDAgovernment officials and market analysts, Bange told Reutersthat USDA made the change at the request of CME more than a yearago.

"We are in an era of 24/7 trading. I don't see how you canpick a time which is not going to affect someone when yourelease the report," said Bange, noting markets are always opengiven around-the-clock global trading.

Bange said the outlook board was aware of rapid tradingmethods that have developed over the last few years and getscomplaints about its release of the crop report during tradinghours every month. But the agency has tried diligently to getits data to the public website in about 2 seconds after the datais issued.

"We may be able to go less than 2 seconds. I don't see zeroin the offing at the moment," he said, adding that the data isreleased in the USDA lockup in Washington, D.C., but posted byservers in Kansas City.

In contrast, high-frequency traders get the government datain thousandths of a second - and their algorithms are able todart in and out of markets in lightening speed, creating marketliquidity.

High-frequency trading is more common in financial andequity markets with traditionally bigger volumes. But high-speedtrading practices are expanding in the traditional grain marketsand are especially prevalent on USDA crop report days, traderssay.

Big agricultural trade organizations, including the NationalGrain and Feed Association, want CME to suspend trading for a"pause" during monthly USDA crop reports, citing erratic CBOTprices during releases of USDA data.

Bange said the Commodity Futures Trading Commission, thefutures regulator, also cannot dictate when the commoditymarkets are open. Trading hours, he said, are up to theexchanges.

"The basic issue is we have no control over when thecommodity markets are open or closed," Bange said. "If we changethe release time, the commodity markets could always changetheir market times."

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