Changes By CME Group Concern Iowa Cattlemen’s Assoc

Date posted - August 9, 2016

feedlot-cattleNorthwest Iowa — Northwest Iowa cattle producers may be adversely affected by changes the CME Group is making to cattle futures contracts. ┬áThe Iowa Cattlemen’s Association says one of those changes is the addition of a seasonal discount of $1.50 per hundredweight on cattle delivered to the Worthing, South Dakota delivery point. The discount will be effective with the October 2017 contract, which will be listed on August 22.

Iowa Cattlemen’s Association┬áCEO Matt Deppe says that action will create a “marketing disadvantage” for Iowa northwest Iowa cattle feeders.

The decision, according to Deppe, “feels like a mandate” on how and when people should feed cattle for market. Deppe also believes the move may decrease cash negotiated trade in the upper Midwest.

A news release from CME said the discount will better align delivery values with cash market prices and result in little or no impact on local cash cattle prices. In the same release, CME said it will also consider moving to a cash settled live cattle futures contract if price discovery and cash negotiated trade in the cattle industry do not increase.

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