Kansas City Board of Trade

Founded in 1856, the Kansas City Board of Trade (KCBT) is located in one of the most productive and important wheat-growing regions in the United States and the world. The main role of the exchange is cash commodity trading, specifically grain trading. The KCBT specialises in hard red winter wheat trading. It is run by its members, who elect a board of directors, which then appoints committees to manage the KCBT’s operations.

The main traders who use the Kansas City Board of Trade are those with commercial interests in grain, including individuals who wish to buy, sell, or mill wheat. The exchange is used by exporters, producers, millers, and grain elevators to protect their cash positions and businesses interests in the wheat market. Traders can buy or sell futures and options in grain. In 2011, the KCBT traded over 6.3 million wheat future contracts. This was equivalent to more than 31.71 billion bushels.

The KCBT wheat futures contract has protected prices for growers and traders throughout the exchange’s history. For sellers and buyers who trade wheat futures and options contracts, grain purchase and sale prices can be locked in advance to help reduce the business risks associated with volatile commodity prices. A futures contract involves buyers and sellers coming into an agreement with set prices, quantities, and date for delivery of products. Meanwhile, options are contracts that involve offering the non-binding right to take a futures position.

Prices on the KCBT are set based on supply and demand, and prices are set by traders as they negotiate. Price can be affected by a number of factors, including world events and weather which may impact supply or demand, or both. When there are more buyers, the price of grain will go up. If the opposite is true and there are more sellers, then the price will drop.

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