More Merc Trade Transactions Being Reported

Progress has already been seen since USDA announced it has agreed to begin accepting feeder cattle prices reported on a “delivered” basis with a freight adjustment for inclusion in Livestock and Grain Market News livestock reports.  USDA indicated that these “delivered” basis transactions will be included in official reports, upon which the Chicago Mercantile Exchange (CME) Feeder Cattle Index™ is calculated, starting Jan. 29, 2007.  Even though the reporting change will not officially be included in the Index until early 2007, the alteration is already demonstrating a positive effect, with approximately 5,000 additional transactions being reported to USDA field offices.

With about 12,000 head being used to calculate the Index in a recent week, the increased reporting would equate to an increase of more than 43 percent.  The success of this enhancement is entirely dependent upon active participation by cattlemen, and for that reason it is essential that producers continue to report their “delivered” basis transactions.

In continuing to strive for the most representative and effective Index possible, USDA, the Chicago Mercantile Exchange and industry participants are going to evaluate the impact of the “delivered” basis alteration on the volume of animals going into calculation of the Index before moving forward with the inclusion of 850-pound animals in the 800-849-pound category.

Producers are strongly encouraged to report their transactions across all weight categories, even those not currently included in calculation of the Index. Through increased producer participation and more complete reporting of data regarding the volume of trade occurring in particular weight ranges, cattlemen can ensure that the CME Feeder Cattle Index continues to be a valuable risk management tool for American cattle producers.