News

CME Group considering more changes to cattle futures contracts

Programs ICON

The CME Group is considering more changes to the way it settles live cattle futures contracts.

David Lehman, CME Group’s Managing Director for Commodity Research and Product Development, tells Brownfield the exchange is working with the cattle industry to ease some of the volatility impacting contracts, including reducing trading hours earlier this year.

Lehman says other potential changes would connect futures more closely to the cash market, “Perhaps delivery at feedlots, if we could tap into the flow from that feedlot directly to the packer, that would put our contract in better alignment with how trading is done in the cash market. We’re also looking at cash settlement, something we implanted in the hog contract about 20 years ago, in the mid-90s.”

A physical delivery means the contracted product is either produced by the holder or delivered to an exchange delivery point and a cash settlement is where the contract holder is paid the difference of the entry price and final price.

Lehman says the cattle industry, including the National Cattlemen’s Beef Association, will be involved in any further changes to the settlement process.

Add Comment

Your email address will not be published.


 

Stay Up to Date

Subscribe for our newsletter today and receive relevant news straight to your inbox!