From what I have gathered, the industry is screaming for the LE to become a cash-settled future, rather than deliverable. I am also wondering if that could allow expanding the actual trading hours from the paltry 4 hours per day to something greater (on CME). Oh, and the hi/lo limits are insane. 3 points up or down from previous day's settlement? Yeesh, doesn't seem healthy. I am still trying to teach myself the cattle industry, but I find it all fascinating. If you wish to keep abreast of Cattle markets without too much headache, check this link every morning ~7-8AM Eastern time. Great stuff in here; A good consolidation of data, with weekly commentary near the bottom. http://www.agcenter.com/newcattlereport.aspx
Hmm, haven't checked into softs lately, but ouch? http://www.cmegroup.com/europe/products/agricultural/softs/physically-delivered-cocoa.html
Nobody trades softs on CME - just like nobody trades grains on ICE (with the exception of canola I guess). Both sides simply need to delist the copycat contracts, period.
The live cattle contract has been around for years, what is the cme going to do to fix it ? I trade cattle and have for years, there is nothing broken with the contract. Cash settlement is not viable for the live cattle contract. The contract is a true hedging tool and producers must be able to make or take dlvry
Well, how about today where LE bounced off the high-limit? And as of this typing, it looks like it is about to hit the high-limit again. Only a 3-point up or down limit? That's only $1,200 of maximum from open. Isn't that restrictive?
In any case, cash or physical delivery, you don't want a position on First Notice Day. Retendering that contract after assignment can generate a fee up to $200 per contract. This weeds out a lot of convergence to spot trades because the most traders will be forced to exit and the bulk of the convergence move happens after First Notice Day.
No I disagree 3 point move equals around a 36 dollar per head move in a physical fed steer. Go back and look at how many times we hit limit either way. It's not a big % We didn't close limit that day and 122.90 was HOD the next day ( today ) Cash fed cattle are selling as high as 136 this week very strong but action in April contract wasn't very good today