For those of us that have traded these markets for decades, this week marks the end of an era… The migration to electronic trading is virtually complete.
For some reason this leaves me with a sad, empty feeling. “Nostalgic” is probably the best way to describe it. That could be because I am one of those that have followed and traded those markets for decades. — jtl
By Cassie Fish, CassandraFish.com. The Beef & Cassandra Fish
For those of us that have traded these markets for decades, this week marks the end of an era. The agricultural trading pits at the CME and CBOT were a place where the professional market maker assumed risk and the commercial trader laid it off with confidence and transparency. There was a distinctive and very discernible action to read, a road map as it were, for a dedicated student of the market.
The trading floor was a vital community as well as a place of commerce. Every major cattle feeder and beef packer talked to someone on the floor, sometimes multiple times daily as information was shared, ideas exchanged and lifelong friendships forged. Farm kids fresh out of college headed to Chicago to seek their fortune and if they stuck with it could learn valuable skills and find opportunities available nowhere else.
The migration to electronic trading is virtually complete. Traders now fly blind with transparency a thing of the past. Computer algorithms generate orders at lightning speed and attempt to read the book before blowing through it. Gone are the days of multiple scaled up or down orders providing fodder for the market to chew through, which created a certain methodical pace much of the time. Here to stay is much greater volatility much more frequently- some of it meaningless in the broader context.
Though the futures pits won’t officially shut down until Monday, today is the expiration of Jun LC, the final pit traded live cattle futures contract after 51 years. Currently Jun LC is trading higher on the week but lower on the month. From a spot market perspective, Jun LC is likely to have the lowest expiration of any cattle contract since April 2014.
The lowest spot price expiration in 14 months is a reflection of the sense of resignation in the cattle industry right now both on the financial and physical side. Resignation not only by those traders who will miss the sense of confidence and fairness that came from conducting business in the pit, but also on the cattle feeding side where the limited negotiation cash trade has diminished the sense of confidence and fairness there as well. There is an underlying feeling that these changes are larger than life and unstoppable translating to a sense of diminished individual power.
Today’s post is dedicated with gratitude to the men and women who took the orders, filled the orders, kept the count straight, reconciled the out trades, swept the paper, assumed the risk and made the market. It was a job well done.
The Beef is published by Consolidated Beef Producers…for more info click here.
Disclaimer: The Beef, CBP nor Cassie Fish shall not be liable for decisions or actions taken based on the data/information/opinions.
Planned Grazing: A Study Guide and Reference Manual. This is the ideal squeal to A Handbook for Ranch Managers. Although the ecological principles remain the same, what was originally known as “The Savory Grazing Method” now answers to a multitude of different names: ranching for profit, holistic management, managed grazing, mob grazing, management intensive grazing, etc. Land & Livestock International, Inc. uses “Restoration Grazing” under its “Managing the Ranch as a Business” program.” No mater what you call it, this summary and synopsis will guide you step by step through the process and teach you how to use it as it was originally intended. No more excuses for failing to complete your grazing plans.