The weakly regulated, wild west show that has been the Chicago futures markets is poised to become a wilder, more global show now that the Chicago Mercantile Exchange announced it was purchasing archrival Chicago Board of Trade for $8 billion.
The Oct. 17 news caused hearts to skip in New York, London and Frankfurt, other financial centers seeking world domination. Only later did the money chasers figure out that the brassy Chicago grab likely ushers in a new era of buyouts and joint ventures that will consolidate futures and securities exchanges around the world into a mere handful.
No surprise. Not that the CME-CBOT deal was a surprise; the coupling came about after years of intense competition and years of coy courtship.
It was made possible, however, when both the CME and CBOT abandoned their clubby, private structures in favor of public ownership. The CME went public – sold stock – in 2002; the CBOT in 2005.
While the news did not go unnoticed in farm and ranch country (“Somehow I’m going to get screwed in this,” e-mailed my hog-producing farmer-neighbor immediately after the announcement), it did go uncommented on by farm and commodity groups.
Nary a word of dissent, assent or indifference on the merger of the world’s two biggest ag futures exchanges was heard from any mainline ag group.
If ever there was a clear editorial comment on the powerlessness of farmers and ranchers in the farm and food marketplace, that stone silence was it.
Nothing? Golly, the marriage of the world’s biggest, most active corn, soybean and food ingredient price setter, the CBOT, to the world’s biggest hog, bacon, feeder cattle, fat cattle and cheese price setter in the world, the CME, and the American Farm Bureau, the National Corn Growers, the American Soybean Association, the National Cattlemen’s Beef Association and the National Pork Producers Council cannot even cough up one burp or press release between them?
Evidently not, even though CBOT hedgers and speculators bought and sold 33 times more soybeans and 12 times more corn in 2005 than U.S. farmers produced while the CME hosted the trading of 1.05 billion futures contracts with an underlying value of $638 trillion.
The silence also suggests few in American agriculture will challenge or question the deal when it arrives at the Department of Justice for what already is being characterized as a slam-dunk antitrust review.
Not enough questions. Even now, more than a week after the proposed buyout, only one ag group, the Organization for Competitive Markets, is questioning what the CME-CBOT deal – with its 23-hours-per-day trading that moves upwards of 9 million contracts worth over $4 trillion – means for farmers and livestock growers.
The Organization for Competitive Markets has no answers, but it at least it’s asking. For example:
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