The National Cattlemen’s Beef Association is asking the CME Group to move its live cattle futures contract to a position where it converges with the cash market.
Specifically, NCBA is asking that fed heifers be included as deliverable cattle to honor a contract. For the past decade, fed heifers have averaged 38% of slaughter cattle. NCBA says that, in an environment of decreasing fed cattle supply, including heifers would benefit both buyers and sellers.
The cattlemen are also asking for an increase in maximum live weights from 1,500 pounds to 1,650. Current carcass weights of 1,050 pounds aren’t discounted, and that carcass weight typically would be yielded from a 1,667-pound animal. The 1,650 pound maximum individual live weight is a reasonable and logical standard, NCBA told the CME.
Ed Greiman, a cattle producer from Garner, Iowa and president of the Iowa Cattlemen’s Association, headed up a task force that looked into the issue. Greiman tells Brownfield that the changes being sought from the CME would protect the live futures contract as a viable and valuable risk management tool, while increasing deliverable supply, better reflecting the trend of increased cattle weights, and improving convergence of futures and cash markets.