By KEVIN WALKER

Michigan Correspondent

WASHINGTON, D.C. — The US. Cattlemen’s Assoc. (USCA) has been expressing its concerns about increased cattle market volatility; in particular, it has been sounding off about the closure of three stockyards to delivery on cattle for futures contracts and other issues the group says may increase cattle market volatility.

USCA President Kenny Graner complained that CME Group of Chicago had recently sent out a notice to the marketplace stating three delivery points for cattle would not renew their participation on the live cattle futures contract: North Platte and Columbus, Neb., and Pratt, Kan.

In a statement to media Feb. 27, Graner said CME had plenty of time to come up with other delivery points to make up for those that were closing. He referred to an earlier USCA letter to CME in which eight other locations were suggested as possible for delivery of cattle. Most were in Nebraska, with a couple in Kansas.

“We need these delivery locations to be available on the contract whether or not they regularly receive deliveries on the Live Cattle contract,” Graner wrote. “In a properly functioning market, the ability to make and take delivery on the contract is critical to keeping the futures market in line with the cash market.”

He said the typical review process for possible delivery points is one month; however, the application for a Dunlap, Iowa, location “has been languishing for the last nine months despite the fact that it is a well-operated and staffed facility that meets all the requirements for regularity” – meaning regular cattle delivery.

Graner also referred to a Reuters news article from Oct. 11, 2017, with a headline saying CME “declares victory” over cattle market volatility. The article stated CME plans no further moves to reduce volatility in its cattle futures market after it made a series of changes to “rein in wild price swings” that drove away hedgers, quoting a managing director.

According to the article, CME, which oversees the Chicago Board of Trade, has cut trading hours, implemented new rules on order messaging and taken other steps to reduce volatility in its cattle market.

“Right now we don’t think there’s a problem to solve, so trying to do something different wouldn’t make a lot of sense,” said Tim Andriesen, CME’s managing director of agricultural products, at the Reuters Commodities Summit.

However, “some traders” are quoted saying that volatility continues to make it difficult to enter and exit futures positions at times.

Reuters also changed its headline, calling it a correction, to say that CME plans no more changes to the cattle contract for now, rather than declaring victory over the problem.

According to the educational website TraderHQ, the entire process “from calf to steak” can take as little as two years, with seven states – Arizona, California, Colorado, Iowa, Kansas, Nebraska and Texas – producing the vast majority of the cattle for consumption in the United States.

Farmers in most other places who raise cattle for beef have a relationship with a packer and do not have cattle used for delivery on cattle futures contracts, said George Quackenbush of the Michigan Beef Industry Commission.