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Minneapolis Grain Exchange
www.mgex.com
Background
Founded as the Minneapolis Chamber of Commerce in 1881, the Minneapolis Grain Exchange has served producers, processors and millers for 125 years. The Minneapolis Chamber of Commerce opened as a regional cash marketplace to promote fair trade and to prevent trade abuses in wheat, oats and corn. Before the development of this centralized marketplace, farmers in the region had no way of knowing if they were receiving the best price for their grain. Most farmers harvested and sold their crops at the same time, so the subsequent glut of grain into the market set the supply and demand curve askew.
In 1883, just two years later, the Chamber of Commerce introduced its first futures contract: hard red spring wheat. This contract was launched to address price risk management needs of buyers and sellers of spring wheat and still trades today, as it has continuously since its launch.
For over 60 years, the exchange operated as the Minneapolis Chamber of Commerce. However, by 1946, the term “Chamber of Commerce” had become associated with organizations devoted mainly to civic and social issues. So, in 1947, the Minneapolis Chamber of Commerce became the Minneapolis Grain Exchange, and the new Minneapolis Chamber of Commerce developed as the business and civic organization it is today.
TODAY’S EXCHANGE
The futures trading pit is madness with method. It is controlled chaos. From 9:30 a.m. to 1:15 p.m. each day, the member-traders of the exchange buy and sell futures and options through a type of auction called “open outcry.” As bids and offers are shouted or signaled through a series of hand signals and as future trades are made, prices are reported to the entire futures trading world.
In addition to the open outcry, new electronic contracts are now listed at the exchange. Hard red spring wheat now trades electronically through online futures trading sites during the nighttime hours. Five index futures and options contracts trade exclusively on the electronic platform.
The MGEX creates a viable trading environment for large numbers of buyers and sellers in both the cash and futures marketplaces. The only authorized contract market for hard red spring wheat; the MGEX trades an average of 4,000 futures and options contracts daily. The cash market at the MGEX also provides a valuable service for market participants. An average of one million bushels of corn, wheat, barley, oats, rye, flax and soybeans change hands daily.
A LOOK TO THE FUTURE
MGEX is committed to implementing changes to meet customer needs. As the futures trading industry continues to evolve, so does MGEX.
In December 2004, MGEX launched five electronically traded agricultural index contracts. These contracts are based on Data Transmission Network (DTN) calculated country-origin based indexes. The indexes represent country elevator prices to a much closer degree than the traditional deliverable contracts.
In addition to the indexes, hard red spring wheat will now trade electronically during the night-time hours. Look for information about these contracts in the products section of this site.
Products
- Hard Red Spring Wheat Futures and Options (MW)
- Agricultural Index Futures and Options