Nothing Good Happens After Midnight

By: Abygail Peterson, Economist & Policy Analyst, Nebraska Farm Bureau

Modern futures markets already provide near-continuous electronic access. Many agricultural contracts trade through overnight sessions, allowing market participants to respond quickly to weather events, geopolitical developments, export demand shifts, and economic news occurring outside of traditional business hours.

There have been many arguments towards 24/7 trading. Some argue that producers would gain greater flexibility to hedge production risks when market-moving news breaks, regardless of time zone. Grain elevators, exporters, and end users could react immediately to changes in global supply and demand. Sites like Kalshi have dipped their toes into trying to trade commodities all day, every day. Currently, Kalshi offers a binary or yes/no structure on price betting. Users can bet on whether soybean, coffee, corn, wheat, and six more commodity futures will go above or below a certain price by a certain time. While the initial idea was to allow these trades 24/7, concerns were raised by many agricultural groups and Kalshi moved these commodity trading hours in alignment with the respective futures market.

Round-the-clock trading is not without challenges. Lower overnight trading volumes can create wider bid-ask spreads and increased volatility. Issues that may be resolved or settle over a weekend would now have an immediate impact. This only compounds pressure on markets that may already be extremely volatile. Producers may also face pressure to monitor markets more frequently, potentially adding stress and increasing complexity of decisions. Risk management tools and market education would become even more important in an always-open environment. Additionally, as stated in a UNL Cornhusker economics article, this may create gaps of liquidity. In other words, trading less at night or on the weekend would allow smaller trades to carry more weight.

As agriculture becomes increasingly global and interconnected, the trend toward longer trading hours is likely to continue. While true 24/7 agricultural trading may still be evolving, the industry is likely to face the question of whether the markets need to sleep or not.