SDCA Statement on CME Discount at Worthing
Statement from South Dakota Cattlemen’s Association President, Todd Wilkinson, regarding the CME Group’s announcement they will add a seasonal discount of $1.50 per hundredweight on live cattle tendered to the Worthing, SD delivery location for the October, 2017 live cattle futures contract.
“SDCA is extremely disappointed by today’s announcement by CME Group to implement a seasonal discount on live cattle deliveries to Worthing, SD. Our region has the highest percentage of negotiated trade of any other major cattle feeding region and we fear the CME proposal may further jeopardize an already tenuous cash market. Further, the CME proposal unjustly penalizes a growing cattle feeding area without similar examinations of whether seasonal adjustments are needed at other delivery points.
In short, fairness is severely inhibited for the cattlemen and women in our region with Worthing being the one and only delivery point targeted for a discount, without sufficient data indicating a discount will achieve the intended purpose of more evenly distributing deliveries among delivery points. Our industry relies on the Live Cattle Futures market as one of the important tools available to help us manage risk and we are concerned the CME Group has forsaken their original customers, beef producers, in favor of market speculators.
SDCA will continue to engage with leadership at the CME Group to discourage future delivery point discounts and encourage them to add more modern and efficient delivery facilities to address the seasonal volume of deliveries at Worthing.”
For more information, visit http://www.sdcattlemen.org or the CME Group’s website at cmegroup.com/livestockupdates.
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Calves on the ground eventually mean dollars in the pocket and steaks in the meat case. It’s the basics of the beef industry.