CME Group proposes discount at Worthing delivery point
On Feb. 19 the CME Group announced their plans to review a proposal to implement a $1.50 per hundredweight discount on cattle delivered to the Worthing, South Dakota delivery point during October, which sometimes sees an unusually high cattle volume that time of year. According to the CME proposal, “Given the cointegrated relationship of CME Live Cattle futures prices with fed cattle spot cash prices, CME believes that it is in the best interest for the marketplace to attempt to achieve a more equal distribution of cattle deliveries across multiple delivery points. Geographically dispersed deliveries will help ensure that expiring month prices reflect supply and demand factors across all delivery regions during all contract months, and prevent congestion at individual stockyards for USDA graders and stockyard personnel. Also, a discount applied to the Worthing, SD stockyard would not be indicative of the quality of the cattle in the region, or of the quality of the stockyard itself, but rather of a localized seasonal supply/demand imbalance.”
The proposal and updates are available online at http://www.cmegroup.com/livestockupdates
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