Fed Cattle Exchange to be Included in AMS Livestock Mandatory Reporting
Beginning on Oct. 5, 2016 sales conducted through the Fed Cattle Exchange, an online trading platform, will be included in USDA's Agricultural Marketing Service Livestock Mandatory Reporting cattle reports as negotiated purchases. The cattle industry requested this reporting and NCBA is pleased with USDA's decision to include these transactions.
The Fed Cattle Exchange provides a web based interface where feedlots can offer pens of market ready cattle for sale, and packers can bid on those offerings in a timed format, similar to an online auction. The Fed Cattle Exchange was launched this year as a new method for marketing slaughter cattle in response to the decline in the cash slaughter cattle market. This decline that occurred as the supply chain moved to using more formulas and forward contracts to market cattle more efficiently has consequently reduced opportunities for price discovery in the negotiated market.
According to USDA, based on the weekly sales activity since launching in May of this year, approximately 1,800 head of cattle per week have been offered through the Exchange at price levels in line with the current weekly reported markets. USDA'S Livestock Poultry and Grain Market News estimates the addition of these transactions in LMR will increase the reported weekly volume of negotiated purchases from 1.5 to 2 percent.