Beef Buzz News
Changes to Help Offset Market Volatility to Be Implemented By CME Group in Live Cattle Contracts
Wed, 24 Aug 2016 16:43:28 CDT
Lots of concerns are being raised by beef producers these days over the volatility being observed in recent market activity. The Chicago Mercantile Exchange (CME) Group has met with members of the cattle industry to discuss possible solutions to this situation that has producers at a disadvantage. In response, the CME has announced some changes being implemented for live cattle contracts in an effort to offset the volatility. K-State Extension Beef Specialist Dr. Glynn Tonsor explained to Farm Director Ron Hays, he believes these changes will have a positive impact for cattle producers.
Listen to Dr. Glynn Tonsor explain to Farm Director Ron Hays the changes the CME Group is making
Three changes to live cattle futures contracts have been announced - two of which Tonsor says address important technicalities in futures trading. The first change, is CME’s intention to place a “seasonal discount” of $1.50 on the October contract only for deliveries to Worthing, South Dakota, according to Tonsor. The second he says is to create equality in the specifications of deliveries. Instead of a 55/45 split, the delivery mix will change to 60 percent Choice and 40 percent Select. This is scheduled to start with the October 2017 contract.
“Basically, the stated goal here is to better align delivery values with cash market prices - keep regional differences a little more in line with what we’d expect,” Tonsor said, adding also, “Effectively, that’s basically just trying to get the specs in line with what we actually observe in live cattle.”
The third change, calls for a short-term pause in deferred live contracts beyond the fall of 2017. Tonsor says, for now, the CME has stated that they do not plan to list or make available any of the contracts after October 2017. He says this is due to concerns about the inner workings of the cash market. Tonsor asserts that the CME is working with several segments of the industry in an effort to try and understand all the aspects of liquidity transparency of the fed cattle market; an issue markets have wrestled with for a long time.
“There’s a lot of things on the table here,” Tonsor said. “A lot more unanswered questions than there are answers at the moment, I think can be a fair statement.
“I think it’s an effort to get this contract, which is basically a price risk management tool, to get them better in line with what we think real value of animals are…And I think that’s good.”
Listen to Dr. Glynn Tonsor explain CME’s changes to live cattle futures trading in further detail to Farm Director Ron Hays, during today’s Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
right-click to download mp3
WebReadyTM Powered by WireReady® NSI
CattleFax CEO Randy Blach Says Inflated Prices are Here to Stay Tue, 26 Oct 2021 10:22:48 CDT
Derrell Peel Says Latest Cattle on Feed Report is Slightly Friendly for the Cattle Industry Mon, 25 Oct 2021 10:03:24 CDT
Labor Shortages are the Root Cause of Stagnant Cattle Prices Says Justin Benavidez Fri, 22 Oct 2021 13:14:11 CDT
Texas AgriLife Economist Justin Benavidez Says 75% Measuring Improvement in Negotiated Trade Thu, 21 Oct 2021 10:50:53 CDT
Beef Prices Likely Will Not Rise Anymore as Consumers Deal with Inflation Wed, 20 Oct 2021 20:06:13 CDT
OSU's Derrell Peel Says Winter Wheat Pasture is Especially Valuable This Year Tue, 19 Oct 2021 10:55:09 CDT
Curbing Methane Outputs Could Be a Win for Producers and Consumers Mon, 18 Oct 2021 21:30:23 CDT
NCBA’s Kent Bacus Hopeful Biden Administration Will Pursue Deals Beneficial to US Beef Producers Fri, 15 Oct 2021 10:08:11 EDT
NCBA's Kent Bacus Talks Trade, Contrasts Biden and Trump Administrations Thu, 14 Oct 2021 20:07:24 CDT
Economist Katelyn McCullock Says Holiday Beef Prices are Expected to be High Wed, 13 Oct 2021 10:35:40 CDT
Dr. Bart Fischer Says Robust Price Discovery May Not Lead to Higher Cattle Prices Tue, 12 Oct 2021 10:48:23 CDT
More on Fall Calving Best Practices from Dr. Rosslyn Biggs Mon, 11 Oct 2021 16:31:33 CDT
NCBA's Todd Wilkinson Carries Message of Caution to Members of the House Ag Committee Fri, 08 Oct 2021 12:31:29 CDT
Cattle Producers Should Review Records Before Fall Calving Says Dr. Rosslyn Biggs Thu, 07 Oct 2021 21:15:27 CDT
Help Newly Arrived Cattle Recover Quickest by Providing High-Energy Feed Wed, 06 Oct 2021 10:09:20 CDT
Cattle Industry Waits for Third Quarter Numbers From 75% Plan Tue, 05 Oct 2021 10:25:26 CDT
Missouri Cattle Industry Leader Taking Wait-and-See Approach on Industry Price Discovery Plan Mon, 04 Oct 2021 11:29:07 CDT
Fiscal Year 2022 Kicks Off New and Proven Marketing Campaigns for Oklahoma Beef Fri, 01 Oct 2021 10:56:18 CDT
Hugh Aljoe Says Regenerative Agriculture Education Material Will Soon be Available Thu, 30 Sep 2021 09:53:16 CDT
OSU's Derrell Peel Urges Fall Stocker Operations to Review Budgets Before They Buy Fall Feeders Wed, 29 Sep 2021 19:27:47 CDT
Beef Cow Herd Liquidation Continues to Unfold Tue, 28 Sep 2021 12:47:54 CDT
Latest Cattle on Feed Report Shows Some Regions of the Country are More Current Than Others Mon, 27 Sep 2021 10:28:22 CDT
New Research Explores the Pros and Cons of Cash Cattle Markets in the U.S. Fri, 24 Sep 2021 10:16:19 CDT
New Research Shows Grid Market System Adds $700 Million in Value to U.S. Beef Thu, 23 Sep 2021 11:19:06 CDT
Don Close, VP of Rabo AgriFinance Explains How Beef Won Over the Chinese Consumer Wed, 22 Sep 2021 10:39:31 CDT
OCA's Michael Kelsey: We Need to Take a Pause on Issuing New Medical Marijuana Grower Permits Tue, 21 Sep 2021 13:19:27 CDT
NCBA's Josh White Says Beef Quality Assurance Produces Better Beef Mon, 20 Sep 2021 10:35:46 CDT
Certified Angus Beef Program is a Win for Producers, Processors and Consumers Says John Stika Fri, 17 Sep 2021 10:48:26 CDT
John Stika Believes the Pandemic Shows Consumers Want High Quality Beef Thu, 16 Sep 2021 08:07:17 CDT
Dr. Jody Wade's Advice to Cattle Producers is Stay Ahead of BRD Wed, 15 Sep 2021 13:14:02 CDT
Katelyn McCullock Sees High Hay Prices in the U.S. Tue, 14 Sep 2021 10:49:50 CDT
NCBA's Ethan Lane Believes mCOOL is Old News Mon, 13 Sep 2021 11:15:37 CDT
NCBA's Ethan Lane Heard Little New in White House Briefing on Competition Fri, 10 Sep 2021 11:45:17 CDT
Dan Halstrom Predicts 2021 Will Be a Record Year for U.S. Beef Exports Thu, 09 Sep 2021 11:15:04 CDT
Dietician Shalene McNeill Says Consumers Enthusiastic About Including Beef in Their Diet Wed, 08 Sep 2021 09:25:33 CDT