Kansas City Board of TradeBy George Grow
This is the VOA Special English AGRICULTURE REPORT.
Many crops are used far from where they are grown. Commodity markets guarantee the successful movement of crops and other products from seller to buyer.
The Kansas City Board of Trade is one of the oldest and largest commodity markets in the United States. It first opened in Kansas City, Missouri, one-hundred-twenty years ago.
Visitors to the Board of Trade may be surprised by what they see. At the sound of a bell, about fifty men start shouting and waving at each other. Many are wearing bright-colored clothing. The colors represent trading companies. The trading area has eight sides and a series of steps. Traders stand on the steps so they can be seen. All trades must be completed in the trading area.
Kansas City is in the center of where America's wheat is grown. The area's main crop is a kind of wheat called hard red winter wheat. Sheila Summers is an official with the Board of Trade. She says the Board sets the price for hard red winter wheat throughout the United States. She says that price affects wheat markets around the world.
Natural gas, soy bean oil and other agricultural products also are traded on the Kansas City Board of Trade. Anyone can buy or sell agreements, or contracts, on the exchange. They do this by placing orders with commodity brokers. These agents then give the orders to the traders.
Commodity traders often trade contracts for crops that will be ready at a future date. These are called commodity futures. Futures trading helps to reduce the risk of sharp price increases or decreases. It also helps to guarantee at least some profit for the trader.
Traders say the Board of Trade provides a secure market for American wheat growers and traders. They say that having a lot of traders helps to guarantee fair prices. However, they add that trading is never completely without risk.
Wheat production worldwide affects wheat prices and the number of trades completed at the Kansas City Board of Trade. Last month, the exchange set a January record when almost seventeen-thousand contracts for hard red winter wheat were traded in one day. Traders say the record was a result of lower wheat production in the United States and other areas, including Argentina, Australia, China, and India.
This VOA Special English AGRICULTURE REPORT was written by George Grow.