With negotiated grid purchases, the base price is negotiated between buyer and seller and is known at the time the agreement is made but the final price is determined by applying a series of premiums and discounts based on carcass performance after slaughter. Forward contract purchases are agreements for the purchase of cattle executed in advance of slaughter the base price is established in the agreement. Negotiated purchases, often referred to as the “spot” or “cash” market, are purchases for which the price is determined through buyer and seller interaction on the day of sale. There are four primary transaction types reported by USDA through LMR. Thankfully, due to Livestock Mandatory Reporting data, we are able to understand how these animals change hands and how these methods have evolved over time. There are a variety of market transactions through which cattle are marketed in the U.S. The aim of this provision is to aid producers in the industry by creating more accurate forecasts for estimated slaughter numbers, anticipating a packer’s future needs for animals, and as a result, better evaluating supply and demand conditions in the marketplace. Similar to the contract library provision, this requirement already exists in the swine industry and has proven valuable to producers. The bill would also mandate daily reporting by packers on the number of cattle scheduled to be delivered for slaughter for the next 14 days. ![]() ![]() This legislation would provide cattle producers valuable information on certain contract provisions already utilized in the marketplace and position them to be better able to negotiate a more favorable contract with a packer. USDA’s Swine Contract Library is intended to aid in the price discovery process and provide equal access to market information for all market participants. USDA already maintains a swine contract library, which has a catalog of the types of contracts offered by packers to swine producers for the purchase of swine (including swine that are purchased for future delivery). ![]() The Cattle Market Transparency Act aims to improve price discovery by creating new reporting requirements and providing producers with additional information going into negotiations by mandating the creation and maintenance of a library of marketing contracts offered by packers to producers. The bill aligns with the goals set forth last year by the American Farm Bureau Federation’s Cattle Market Working Group, as well as new cattle marketing policy passed by AFBF’s voting delegates at the 102 nd Annual Convention in January. This bill would work to establish regional mandatory minimum levels of negotiated trade, as well as mandate new reporting requirements and address confidentiality guidelines in Livestock Mandatory Reporting. The bill focuses on ensuring robust regionally negotiated cash trade and providing producers with more pricing information. Deb Fischer and Ron Wyden introduced the Cattle Market Transparency Act of 2021.
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