Kansas City, Mo. The Kansas City Board of Trade, which opened more than 150 years ago, on Friday hears the last call in Kansas City for contracts on the wheat used to make bread.
Chicago-based CME Group bought the exchange last year for $126 million and is moving it to CME’s Chicago floors, The Kansas City Star reported.
“We were at one time the center of what made the world have an adequate supply of food, and this is going to be gone now,” said Morton Sosland, editor-in-chief of Sosland Publishing Co., which publishes Milling and Baking News.
The board began in 1856 as a social club and merchant association and started trading in commodity futures in 1876. A futures contract allows buyers and sellers to specify the quantity, price and delivery date of a trade in advance of the sale, protecting both parties from sudden price shifts.
By purchasing seats at the board, members could gain the rights to trade at the exchange. In 1875 the most costly annual membership was $20, according to Kansas City writer and historian Heather Paxton’s history of the exchange. When CME bought the exchange’s 192 membership seats in 2012, it paid the equivalent of $656,250 per seat.
As Kansas wheat harvests grew over the decades, millers and shippers set up shop in Kansas City to cash in on the grain trade. With much of the hard red winter wheat trade passing through the Kansas City exchange, it was once one of the country’s largest financial markets.
“So much of the wealth and prosperity of the city, at least in the 20th century, came from people associated and involved with this market,” said Michael Braude, who oversaw the board from 1984 to 2000. Now, computers handle trading for 87 percent of Kansas City’s hard red winter wheat contracts.
Starting Monday, trading of the Kansas City hard red winter wheat contract will take place in Chicago, where it can be traded next to contracts for the soft white wheat used in making cakes.
CME will keep “Kansas City” in the name of the hard red winter wheat contract for now. The wheat contract carries strong name recognition and also comes with a history that CME Group respects, said Tim Andriesen, managing director of commodity products at CME Group.