Cattle producers in the region are reacting negatively to the CME’s proposed changes to the live cattle contract. Iowa Cattlemen’s Association President Dr. Phil Reemtsma says the biggest red flag is the proposed cash settlement for the live cattle futures. He says the development of a cash index would require the use of Mandatory Price Reporting information, which currently can be manipulated and give the packers a leg up.
He says the other concern is that speculative traders could also manipulate the market since they don’t have to fear taking delivery on a contract.
Reemtsma says the root of the problem is more cash transparency is needed in the market and that is difficult to achieve when southern feedlots do mostly formula contracts with packers.
He says they’re also disappointed the CME Group has chosen to move forward with a seasonal discount on deliveries to Worthing, South Dakota in October. Plus, the CME has rejected a request to implement a one second delay on electronic trades.
