Cattle market volatility has been a concern for Iowa cattle producers, especially since the historic drop in fed cattle prices that occurred in October of 2015. Since that time, volunteer leaders from the Iowa Cattlemen’s Association have been actively working toward solutions to the current issues in cattle marketing.
Many of those solutions became part of the National Cattlemen’s Beef Association (NCBA) official policy during the 2016 annual Summer Business Meeting last week. The NCBA meeting took place in Denver, Colo. July 13-16. Several Iowa Cattlemen’s Association leaders attended the meeting including Brad Kooima of Rock Valley, Mike Cline of Elgin, David Trowbridge of Tabor, Justin Rowe of Dallas Center, Ben Novak of Elberon and Ed Greiman of Garner.
ICA was able to get the amendments included in NCBA policy
One of the priorities for Iowa cattle producers was strengthening support for the Worthing, S. D. delivery point. In March, the Chicago Mercantile Exchange proposed a $1.50 per cwt discount on cattle delivered for the October 2017 cattle futures contract. ICA members feel that if this discount is added, the CME is setting a dangerous precedent for additional modifications, leading to confusion and distrust in the system.
Amendments to NCBA’s policy now include broader support for the delivery point process, including opposition to “any changes by the CME group that would adversely affect cattle feeders’ ability to deliver on Live Cattle contracts including, but not limited to, the discounting of deliveries to any delivery point.” The same policy, passed by the Cattle Marketing and International Trade committee, includes the resolution to “encourage and support the existence of numerous well-designed and efficient physical delivery points to which cattle may be delivered.”
Increasing price discovery is another priority for ICA
Increasing price discovery in all major cattle feeding regions is another priority for Iowa Cattlemen’s Association members. Approximately 60% of Iowa’s fed cattle are marketed through cash negotiated transactions, creating a transparent price discovery process for the cattle in the region because these prices are reported through USDA’s Mandatory Price Reports. In other major cattle feeding regions across the county, less than 10% of cattle are marketed through cash negotiated transactions.
Brad Kooima of Rock Valley represented Iowa’s cattle producers on this issue in NCBA’s Cattle Marketing and International Trade committee meeting. “I understand that change typically comes slowly, however, I was delighted that cattlemen realize that we cannot allow this trend of non-negotiated cattle to continue,” says Kooima. The committee passed a resolution to “pursue market-driven initiatives that encourage and increase negotiated cash trade in all major cattle feeding regions.”
Other positive changes including dividing NCBA’s Cattle Marketing and International Trade committee into two separate committees and the creation of a staff position at NCBA dedicated to cattle marketing.