Cash commodity trading introduced on Internet

by Teresa Acklin
Share This:

Internet Commodity Exchange Corp. (ICE), incorporated in May, has introduced what its executives describe as the first interactive, real time, business to business, vertical exchange for the agriculture industry: a website devoted to cash grain trading.

"ICE will redefine the rules of engagement between buyers and sellers by broadening market reach and enhancing the price discovery process," said Brett Johnson, director of marketing and development for Seaboard Corp., which developed ICE. "It's not our intent to change the cast of characters who trade commodities but the way in which they interact with each other."

Grain-based businesses including the North American Grain Division of Farmland Industries, Inc., The Scoular Co., den-Dulk Dairy and Zachy Farms have already agreed to participate as ICE subscribers and users.

ICE will facilitate transactions of corn (maize), wheat, soybeans and feed by-products. Trading on ICE will be governed by clear rules, industry-wide pricing, open market information and anonymous buying and selling because buyer or seller identity could skew market price, company executives said.

Here is an example of how it works:

A grain buyer in western Kansas logs onto, and accesses all offers of No. 2 yellow corn for September shipment. Then he would have the option to search for all of the offers that are only in his market and bid in response to those offers. If nothing meets his criteria, he could post a bid to buy corn and let sellers compete for his business.

Although other attempts at cash trading on the Internet have failed, Mr. Johnson said ICE is different.

"Most of what is out there today are information-based sites — places where traders can post bids or offers and then wait for someone else to e-mail them back with their acceptance or counter," he said. "ICE opens the cash market to competition by providing a virtual trading pit that allows traders to watch the action as it happens."