CME Group modifies cattle requirements due to COOL

All live cattle delivered against live cattle futures required to be U.S. born and raised.

Effective December 18, CME Group Inc. will require all live cattle delivered against live cattle futures to be born and raised in the U.S. The amendment is intended to provide clarity as to the existing delivery requirements of the live cattle futures contract if the U.S. Congress and the U.S. Department of Agriculture repeal the Country of Origin Labeling law for beef and pork, the company said in a statement.

“The amendments are being made as the timing of legislation and a final United States Department of Agriculture rule repealing COOL for beef and pork has not been determined, but we believe it important to provide certainty to the marketplace as to existent requirements,” CME Group noted in the statement. “The purpose of these rule changes is to maintain the status quo in an uncertain policy environment, since the current U.S. origin requirement is dependent on COOL being in place.”

A CME group representative told Feedstuffs that live cattle futures have required U.S.-origin only live animal or carcass delivery since 2008 and that the reference to COOL was incorporated into the company's contract language in 2003.

"These modifications to our rules simply clarify that U.S.-origin cattle will continue to be a requirement for delivery against listed contract months with open interest regardless of Congressional action on COOL," the representative said. "We believe these changes provide our customers and the market with the clarity and continuity they need to continue to execute their risk management and trading strategies." 

During the next several months, the company said it intends to engage with the industry to discuss whether non-U.S. origin cattle should be allowed for delivery against the CME live cattle futures contract for contract months subsequent to the April 2017 contract month. Until a determination is made, however, CME Group said it will suspend listing additional CME live cattle futures and options contract months.

The new requirement will apply to current trading contract months through April 2017.

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