PAGE TITLE

AFBF Comments in Opposition to CME’s Live Cattle Delivery Discount Proposal --dtd 03/28/2016

AFBF Comments in Opposition to CME’s Live Cattle Delivery Discount Proposal --dtd  03/28/2016
The Chicago Mercantile Exchange has proposed imposing a $1.50 per hundredweight (cwt) discount on deliveries against October live cattle contracts at Worthing, South Dakota. This proposal appears to be aimed at discouraging beef cattle producers in the area from making such deliveries to satisfy hedge positions.
 
The CME group has noted prices at the Worthing market, particularly for the October contract, average $1.51 per cwt below the average for the Colorado, Nebraska, Kansas, Texas, Oklahoma and New Mexico markets. CME believes that because this average is well below the spread of average prices at the other markets used for delivery, it makes overall convergence difficult. One of the drivers for the price decline at the Worthing market appears to be the seasonal increase in the number of animals marketed through that location for the October contract. 
 
AFBF sent a letter to the CME expressing opposition to the proposal.


Want more news on this topic? Iowa Farm Bureau members may subscribe for a free email news service, featuring the farm and rural topics that interest them most!