Congressional delegation delivers beef to Chinese Premier Senator Daines
In April 2017, Sen. Steve Daines (R., Mont.) hand carried four Montana steaks and a photo of Fred Wacker of Miles City and his cows to China and presented them to Premier Li Keqiang to underscore the importance of opening Chinese markets to U.S. beef imports.

Beef issues highlighted during Montana Ag Summit

CFTC's Giancarlo discusses live cattle futures contracts concerns, and USDA's Perdue expresses optimism on momentum regarding resuming China beef sales.

The 2017 Montana Ag Summit Thursday featured several high-profile speakers and panels on various issues affecting present and future agriculture, and top-of-mind beef industry issues were included.

J. Christopher Giancarlo, acting chairman of the U.S. Commodity Futures Trading Commission (CFTC), gave a speech on the future of commodity markets, placing emphasis on the need for regulatory reform and a need to change the “ill-conceived regulatory burdens” that add costs to doing business.

Giancarlo discussed the National Cattlemen’s Beef Assn.'s concerns about the impact high-frequency trading had on certain dates in the live cattle futures contract during 2015 and 2016. He said CFTC’s agricultural futures market specialists on surveillance and market intelligence have done a thorough analysis of trading data and have examined trading patterns and practices of all major types, including natural hedgers, market speculators, high-frequency traders and large asset managers.

“From that analysis, our market experts did not see patterns of behavior by any particular groups that would have an overall negative impact on the market,” Giancarlo reported. “Nevertheless, our market intelligence and surveillance will continue to carefully observe trading patterns, and should we observe any inappropriate or improper activity, we will take any or all action that may be necessary or appropriate.”

R-CALF USA and Sen. Chuck Grassley (R., Iowa) had also asked the Government Accountability Office (GAO) to examine whether meat packers negatively affected prices in the cash and futures markets in 2015. Giancarlo said CFTC is helping GAO in that effort.

The CFTC agriculture team also analyzed the live cattle futures market itself to ensure that it was designed appropriately. They worked cooperatively with the Chicago Board of Trade (CBOT) and the cattle industry. “We identified design issues that, when addressed, preserved and strengthened the stockyard delivery system and made the terms of the contract more transparent to market participants,” Giancarlo said.

Two weeks ago, the Chicago Mercantile Exchange (CME) published for comment a set of proposals to improve price discovery and risk management functions. “The proposals seek to make the delivery process more efficient while ensuring the contract reflects cash market practices in supply and demand,” Giancarlo said.

He commended CME for the sensible improvements and said CFTC will monitor contracts as these improvements come into effect.

China beef status

Giancarlo was followed by a panel speaking on the future of agriculture comprised of Secretary of Agriculture Sonny Perdue, Senate Agriculture Committee chairman Pat Roberts (R., Kan.) and Sen. Steve Daines (R., Mont.).

On April 17, 2017, Daines returned from leading an official congressional delegation trip to China, where he hand-delivered four Montana steaks to China's Premier Li Keqiang and pressed Chinese officials to finalize negotiations on reopening Chinese markets to U.S. beef.

Daines said President Donald Trump isn’t a President who just wants to talk; rather, “he wants action” and that’s being played out in the China beef discussions.

In response to when beef sales could resume in China, Perdue noted that in “trade negotiations, it’s never over until it’s over,” but also said there is “momentum and optimism” on both sides that hasn’t been seen in years.

Perdue said final protocols are being established now and should be done in a couple of weeks to allow for the deadline of beef being shipped no later than July 16.

He added that “we’re serious about doing business” not only with China but also building momentum in recent discussions with Japan and South Korea and said this is “only the tip of the iceberg.”

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