News

GAO to review cattle pricing and high-frequency trading

Following complaints about the sharp drop in cattle prices last year, the Government Accountability Office (GAO) has accepted the request from the Senate Judiciary Committee to study the reasons for the decline.

The National Cattlemen’s Beef Association has been working with the CME Group to address some of the futures volatility issues.

Iowa cattleman Ed Greiman, chair of the NCBA’s marketing committee says after the work they’ve done with the CME group he’s confident they will find solutions.

He says cattlemen across the country are frustrated with the volatility in the cattle markets – but he isn’t giving up.  “We’re going to keep pushing back and we know they’re listening,” he says.  “There is no doubt in my mind that the Chicago Mercantile Exchange is listening.  We’ll keep trying to find a way to get rid of some of this volatility and to make sure this contract can be used by feeders, by packers, and also by the algorithmic traders.  And also to make sure it is a level playing field.”

The GAO will also look at the impact of high-frequency trading on cattle futures contracts.

Earlier this year the CME Group took some steps to reduce volatility in the cattle markets, including reducing trading hours.