Cattle Call is an original production of the Nebraska Rural Radio Association and is presented by Blue Chip Herefords – Oxford, Nebraska.
A new competitor is preparing to challenge CME Group’s longtime dominance in livestock futures trading, but gaining a foothold in an established marketplace may be easier said than done.
Intercontinental Exchange Inc. (ICE), owner of the New York Stock Exchange, plans to launch cattle and hog futures contracts Dec. 7, offering producers and traders an alternative for managing price risk.
Joe Kooima, of KKV Trading, said the move could introduce competition, but attracting enough trading activity to challenge CME will be difficult.
“Once you have the domination of an exchange that we’re all used to seeing the CME, it’ll be kind of tough,” Kooima said.
ICE plans to offer physically settled cattle futures and three cash-settled contracts tied to cattle and hog prices, pending regulatory review. The announcement comes as CME works to modernize its trading infrastructure through Google Cloud technology, a transition that has raised concerns among some trading firms about costs and trading speeds.
But launching a contract and building a successful futures market are two different challenges.
The exchange already trades commodities including coffee, sugar and precious metals. It also launched competing U.S. grain contracts in 2012, but discontinued them in 2018.
“It’s a tough little world to kind of get into, tried it with the grains, didn’t amount to much at all there, but I think it’s just the CME is just the staple to have right now for the hogs and the cattle contracts,” Kooima said.
For cattle producers, the biggest question is whether ICE can attract enough buyers and sellers to establish reliable trading activity. Without sufficient liquidity, a competing contract may offer little immediate benefit for price discovery or risk management.
Kooima also noted that both exchanges would respond to the same underlying market fundamentals, meaning a second platform would not necessarily change how cattle prices are determined.
“They’re all going to feed off the exact same news that you and I talk about, that you and Brad talk about, that everybody talks about. It’s not going to get a different feed of information by any means. It’s just a competition. There’s nothing wrong with competition at all.”
While ICE could eventually provide another option for livestock hedging, Kooima sees CME’s established market presence as a significant obstacle.
Other topics discussed:
- Cash cattle trade: The widening differences between Northern and Southern Plains markets.
- Cattle futures: Bullish technical chart patterns, trading volume and open interest.
- Slaughter cow prices: Seasonal pressure and the impact of increased beef imports from South America.
- Beef demand: Resilience in boxed beef prices despite mixed signals across different cuts.
- Packer activity: Slaughter levels, forward contracts and packer buying interest.
- Regional cattle supplies: Heavyweight cattle and marketing challenges across northwest Iowa and surrounding areas.