DENVER, CO – In an effort to increase price transparency in the cattle market, an industry-wide group developed a 75 percent plan as a path to a voluntary solution.
According to the National Cattlemen’s Beef Association (NCBA), it begins with robust price discovery which is determined by two “silos”: one includes sufficient levels of weekly negotiated trade and the other, packer participation in such negotiated trade.
The trade is analyzed every quarter and to avoid tripping a “major trigger”, each of the four regions needs weekly trade of 75 percent of the unique price discovery threshold and packer participation obligations of no less than 75 percent.
If a major trigger is tripped in any two out of four rolling quarters, the Regional Triggers Subgroup will recommend NCBA pursue legislative or regulatory measures to compel adequate negotiated trade for robust price discovery.
During the first quarter of 2021, a major trigger was tripped. However, according to data collected under Livestock Mandatory Reporting (LMR) and published by the Agricultural Marketing Service at USDA, the Subgroup found that no triggers were tripped in the negotiated trade volume silo during the second quarter.
For the first two quarters, the packer participation silo was not complete but NCBA recently finalized agreements with the four major packers to analyze their participation in the negotiated market from the third quarter onward.
The completion of the packer participation silo brings the total number of minor triggers in the program to eight — one for each of the four cattle feeding regions analyzing negotiated trade volumes and one for each of those regions analyzing negotiated packer procurements.
(SOURCE: All Ag News)