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Efforts to address market volatility

Some members of the National Cattlemen’s Beef Association want the organization to work with the CME Group to reevaluate the daily price limit to ensure it accounts for fundamental market conditions. 

Dave Duzan, an Illinois cattle producer and president of the Illinois Beef Association, says wide swings increase market volatility. “A lot of that’s pushed by short-term algorithm money, short-term trading,” he says.  “The managed funds that get in there and take a position either long or short they tend to skew the market.” 

He tells Brownfield when producers are hedging live cattle it becomes even more of a challenge. “If you’re short the board in a hedging position to limit your risk, those are huge margin calls,” he says.  “And you take that times, let’s say a guy that’s got 100,000 head on feed, and they’re all owned cattle, it is a huge drain of equity.”

This resolution — along with others that were passed out of committee will be considered later today. 

AUDIO: Dave Duzan, Illinois Beef Association