Livestock Market Enhancements

CME Group is taking a number of steps designed to further enhance its livestock markets.

Latest Updates

September 2016: Listing of December 2017 CME Live Cattle Contracts

Based on feedback from customers, CME Group will list the December 2017 Live Cattle futures and options contract months effective Monday, October 3, pending all relevant regulatory periods.

Resources

Customer Letter, Sept. 20, 2016

SER 7747


August 2016: New Steps to Enhance Cattle Futures Markets

Based on continued collaboration with the cattle industry and results from an independent study conducted by Informa Economics, CME Group recently announced it will take additional actions to enhance Live Cattle futures markets and address cattle market performance.

Resources

News Release: CME Group Announces New Steps to Enhance Live Cattle Futures Markets

Informa Economics study

Customer Letter, Aug. 5, 2016

SER 7716

Seasonal Discount to Worthing, South Dakota Delivery Point

Based on extensive customer feedback, internal review and Informa’s independent research, CME Group will add a seasonal discount of $1.50 per hundredweight on live cattle tendered to its Worthing, South Dakota delivery location for the October contract only. The new discount will be effective with the October 2017 contract, which will be listed for trading on Monday, August 22, 2016, pending CFTC review. The extensive research supporting this decision concluded that this discount would better align delivery values with cash market prices and maintain compliance with CFTC’s policy on location price differentials, while resulting in little or no impact on local cash cattle prices.

Revised Grading and Quality Specifications

Based on industry feedback and increasing quality grades seen in all major fed cattle regions, CME Group will update par quality grades for both live and carcass-graded deliveries to 60 percent choice and 40 percent select, from 55 percent and 45 percent respectively. Pending regulatory reviews, these changes will be effective with the October 2017 contract month.

Delayed Listing of Additional Contracts

CME Group applauds the efforts of the industry to create additional market transparency, particularly through efforts like the recently introduced cash cattle auctions.Transparent negotiated or auction-based cash markets are a prerequisite for effective futures markets, particularly those with physical delivery. However, only approximately 20 percent of cattle sales are negotiated in cash markets across the U.S. today with less than five percent in major producing states like Texas and Oklahoma. As a result, CME Group will delay listing any additional contract months beyond October 2017 as we continue working with the industry to evaluate ways to improve cash market transparency, review cash market developments and consider the introduction of cash-settled products if transparency does not improve.  


February 2016: Reduction of CME Livestock Trading Hours

Based on customer requests, CME Livestock futures and options trading hours were reduced to align with the period of greatest liquidity in these markets. During 2015, roughly 87% of daily Livestock futures and options trades occurred during the proposed hours.

Effective Monday, 29 February, the proposed trading hours for Live Cattle, Feeder Cattle and Lean Hog futures and options were as follows:

  • CME Globex futures and options: 8:30 a.m. to 1:05 p.m. Central Time (CT) Monday to Friday
  • Open outcry options: 8:30 a.m. to 1:02 p.m. CT Monday to Friday

The daily settlement period and procedures for CME Livestock contracts remain unchanged.


February 2016: Formation of cattle market joint working group

CME Group formed a working group with the National Cattlemen’s Beef Association to discuss other possible enhancements to its cattle markets, including, but not limited to, circuit breakers and other measures to further heighten market quality.


February 2016: Messaging Efficiency Program

In addition to the measures described above, CME Group recently added its livestock products to the messaging efficiency program on Monday, 1 February.

Learn more about the messaging efficiency program.


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