You’ve been granted free access to this subscribers only article.
Cattlemen send marketing comments
Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) submitted its formal comments Jan. 3 to the Commodity Futures Trading Commission (CFTC) for the CFTC’s rulemakings as required by the Dodd-Frank Wall Street Reform Act. According to a Jan. 4 R-CALF USA press release, the group urged the commission to use its rulemaking authority to fully restore the cattle futures market to its original purpose of affording U.S. cattle producers a useful marketing tool, void of distortion and manipulation by certain speculators and other dominant market participants, i.e., the concentrated meat packers.
In its comments, R-CALF USA again pointed out that U.S. cattle producers sell their cattle into one of the most highly concentrated marketing structures in the U.S. economy, as today, the four largest U.S. beef packers purchase and slaughter about 85 percent of all slaughter-ready steers and heifers.
“The cattle futures market is susceptible to downward price movements -- in contradiction to supply/demand fundamentals, when beef packers, who may hold a physical hedging position in the market, also engage in substantial speculative short selling of the market,” R-CALF USA CEO Bill Bullard explained. “The effect of the beef packers’ speculative short selling is to lower not only the futures market price, but also the cash spot market price, which intrinsically is tied to the futures market.”
R-CALF USA believes the commission should:
•Make it unlawful for dominant beef packers to engage in speculative short selling of the market to effectively drive down both futures prices and cash cattle prices.
•Ensure that the live cattle futures market is dominated by physical hedgers, which can be accomplished in the Commodity Futures Trading Commission’s rulemaking by imposing aggregate speculative position limits and distinguishing trades involving bona fide hedgers versus those involving speculation.
•Impose effective speculative position limits across all markets that would curb the commodity indexing strategies of large institutional investors, whose strategies severely distort futures market price discovery.
•Restore daily market price limits to levels that minimize market volatility and reform the practice of allowing cash settlements on futures contracts in lieu of actual delivery of the commodity, a practice that effectively lowers the cattle futures price on the day of contract expiration.
•Impose effective speculative position limits on all feed grain commodities markets that would alleviate the transference of market distortions from the feed grains futures market to the cattle futures market.
Your Opinions and Comments
Be the first to comment on this story!
You must be logged in to post a comment.
Agriculture Today Archives
Customs intercepts pest new to the United States (May 25, 2016)
Does wounded tree have a chance? (May 25, 2016)
Livestock Market Reports (May 25, 2016)
Mother Nature whips Wilson County crops (May 25, 2016)
Scrapie confirmed in Texas (May 25, 2016)
TDA Market Recap (May 25, 2016)
Texas Hay Report (May 25, 2016)
Beef cattle seven-year decline ends (May 18, 2016)
Educational video for water well owners (May 18, 2016)
Free Beef Quality Assurance training set for May 25 (May 18, 2016)
Fretwell wins Region 8 high school all around rookie saddle (May 18, 2016)
Grant to restore, enhance the monarch butterfly habitat (May 18, 2016)
Grass-fed beef conference (May 18, 2016)
Gun safety and barbecue in New Braunfels (May 18, 2016)
La Vernia Poultry Judging wins state, advances to nationals (May 18, 2016)
Lawn, landscape, rainwater program May 21 in Floresville (May 18, 2016)
Lesser prairie chicken off the list (May 18, 2016)
Livestock Market Reports (May 18, 2016)
Luling Foundation Field Day (May 18, 2016)
Protecting your tomatoes (May 18, 2016)
TDA Market Recap (May 18, 2016)
Texas Hay Report (May 18, 2016)
As El Nińo fades, expect warmer, drier weather says Texas A&M expert (May 11, 2016)
Floresville team wins second at state (May 11, 2016)
Livestock Market Reports (May 11, 2016)
Llamas, load up! (May 11, 2016)
TDA Market Recap (May 11, 2016)
Texas Hay Report (May 11, 2016)
Transplanting mountain laurels (May 11, 2016)
2016 La Vernia Junior Livestock & Poultry Show (May 4, 2016)
Beef, forage symposium May 10 (May 4, 2016)
Cattle raisers’ crime watch (May 4, 2016)
Corn acreage increases in Texas (May 4, 2016)
Help controlling the weeds (May 4, 2016)
Krueger leads the way at La Vernia stock show (May 4, 2016)
Land Heritage nomination deadline nears (May 4, 2016)
Livestock Market Reports (May 4, 2016)
TDA Market Recap (May 4, 2016)
Texas Hay Report (May 4, 2016)
May 2016 Gardening Calendar (May 1, 2016)