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KayDee Gilkey Cattle Market Volatility
by KayDee Gilkey, click here for bio

Program: Farm and Ranch Report
Date: May 18, 2017

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If you have been watching the cattle markets the last week or so — you’ve noticed the swinging of prices. National Cattlemen Beef Association Sarah Calhoun, NCBA manager of government affairs, discusses the volatility the industry has recently experienced in the cattle markets.

Calhoun: “There have been a lot of different things that have been contributing to the volatility. Volatility is something we experienced on the way up to the historic prices a couple of years ago and we are witnessing it today. There have been couple of different factors that we’ve been able to hone in on with our working groups here at NCBA. What we have found out is that we’ve found out is we’ve really understood more of how important a robust cash market is. When we have producers who contribute to price discovery that is what definitely helps in the swing of prices. Another behavior of the market, that we’ve been addressing — that initially was point of concern but now we’ve gained a lot more better understanding — is what we would call the roll period. It’s when we’ve got have heavy speculators or market participants who don’t intend to take delivery at end of the delivery period for a live cattle contract. Those market participants are expected to roll those open positions out of the spot month and into deferred contracts. That is what we saw the first week of May when we had such high historic volumes that were accompanied with low open interest changes.”

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