CME Group Announce Changes to Live Cattle Futures

The CME Group recently announced changes to amend the Live Cattle futures rules concerning delivery. ICA strongly advises CME to reject the current proposal specific to live cattle futures contract specifications for the Worthing, SD delivery point.

The proposed change would add a seasonal discount of $1.50/cwt on deliveries tendered to Worthing, SD for the October contract month. According to the CME, since it’s inception in 2009, 50.9% of all delivered loads of cattle were originally tendered to Worthing, SD.

ICA members feel that if this discount is added, the CME is setting a dangerous precedent for additional modifications, leading to confusion and distrust in the system.

“The Live Cattle Futures Contract through the CME has served as a meaningful risk management tool for cattlemen,” states Dustin Puhrmann, ICA Feedlot Council Chair. “The CME needs to maintain its revered consistency for delivery points across the country. Distribution of cattle on feed nor types of cattle fed and marketed should make a difference on the tendered location.”

ICA members are concerned that the CME proposal as presented will negatively impact effective use of the Live Cattle Futures Contract to mitigate risk and convergence of the cash and futures market.

Comments on the Chicago Mercantile Exchange’s (CME) Request for Market Feedback on Proposed Changes to Live Cattle Futures Contract Specifications are due Monday, March 21st. Comments should be sent to:

Andrew Crafton

Commodity Research & Product Development

Andrew.Crafton@cmegroup.com

312-634-8923

Thomas Clark

Agricultural Products Business Line

Thomas.Clark@cmegroup.com

312-930-4595

The Iowa Cattlemen’s Association will be submitting comments on behalf of members and strongly encourages producers to submit additional comments.

IA Cattlemen