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Change provides individual producers with more marketing options

Author: Kristy

CME adds heifer delivery option

The futures market provides valuable price information and is an important risk management tool for the beef industry. (mcgladreycareers.blogspot.com)

by Kansas Livestock Association  |   March 18,2014

The CME Group announced last week it has added the option of delivering heifers against the Live Cattle futures contract. This option becomes available with the August 2015 contract. The change provides individual producers with more marketing options. It also is expected to increase deliverable supplies, which should enhance convergence between futures and cash markets.

KLA and NCBA have actively worked to identify opportunities to improve the usefulness of futures markets. The cattle organizations have provided input to futures markets operators and regulators. In addition to suggesting the heifer delivery option, KLA and NCBA have recommended an increase in allowable delivery weights and maintaining existing delivery points.

The futures market provides valuable price information and is an important risk management tool for the beef industry. Futures contracts must reflect industry practices and standards in order to serve as a viable tool for cattle producers.

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