Volatility Concerns Linger As NCBA And CME Continue To Work Towards Solutions

By Kendal Frazier

While lots of concern about the volatility in the futures trade continues to linger in the cattle business, Kendal Frazier, CEO of the National Cattlemen’s Beef Association, tells Farm Director Ron Hays that his organization is still working with the CME Group to resolve this problem. In fact, he says full discussions will pick back up in mid-October with the working group’s next scheduled meeting in Washington, D.C.

“We’ve kind of revised that work group and revamped it,” Frazier said. “They’re also going to meet with people representing the Commodity Futures Trading Commission. We’re going to bring in some outside third party experts, who will address the working group and who really follow the cattle futures market.”

Frazier says they understand that all commodity prices across the board have been under pressure for a lot of reasons, citing a number of economic factors at play including a strong dollar and a slowing economy. However, he contends that the volatility in the cattle futures contracts are unprecedented and need to be stabilized as producers rely on them as tools in managing risk.

The CME Group has prepared some ideas to present to the work group on better ways to structure contracts; ideas Frazier says the group is open to and willing to discuss. One idea though, cash settlements, is off the table as the group affirmed this summer their policy is against such terms.