More Cattle Trading on Negotiated Basis
US - For years the number of cash cattle traded on a negotiated basis kept falling. Percent of cattle produced that traded on a negotiated basis dwindled as well.
7 December 2016
1 minute read
Some of the reduction in negotiated cash trade volume in 2014-2015 was simply due to fewer fed cattle to trade after years of industry contraction. Now the industry is expanding. Producers are also forward contracting fewer cattle because of the steeply discounted futures market and wide basis levels.
As a result, more cattle are trading on a negotiated basis once again. So far in 2016, negotiated transactions have represented 28 per cent of the national market. This compares to 22per cent, 24 per cent, and 25 per cent in 2015, 2014, and 2013, respectively.
The last time the per cent of cattle produced that traded on a negotiated basis was this high was in 2012. It's true some areas, most notably Texas, Oklahoma, and New Mexico, do not trade many negotiated cattle. But even this region is up to 5 per cent negotiated transactions compared to 2 per cent in each of the last two years.
In other states, negotiated trade is larger and appears to be on the rise. In Nebraska this year, almost 60 per cent of the transactions have been negotiated, up from 49 per cent last year. With negotiated volume on the upswing, reliability is improving. Time will tell if the rise in negotiated volume will continue.
TheCattleSite NewsDesk
