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Cattle and Beef Stakeholder Teleconference

Negotiated Cattle, Delivery Periods, and Comprehensive Report

June 15, 2017

Overview

Following the completion of the 0-30 day negotiated period confidentiality study that was sent to cattle and beef 

stakeholders on April 20, 2017, the industry requested additional analysis of the negotiated cattle market and

delivery periods. The Agricultural Marketing Service (AMS) brainstormed ideas with the underlying goal of 

expanding published data within delivery periods in the negotiated market. 

Any of the first five agenda options described below in this document could be implemented in the near future. 

The next two agenda items specifically address a change to the delivery period. The regulation directs the 

delivery periods that AMS utilizes in the negotiated cattle reports. Any change to the delivery periods would 

require a regulation change, proceeded by a comment period.

While reviewing the data internally, it is apparent that negotiated cattle are sold outside of the 30-day window. 

AMS will implement a report change in the near future that designates cattle on the forward contract report as 

being delivered 31+ days. This will distinguish these purchases from other forward contract purchases with a 

basis involved.

Lastly, AMS is in the process of developing a new comprehensive cattle report that will provide weekly prices

and volumes inclusive of all purchase types, up-to-date weight and grading information, and a purchase type 

breakdown. 

As you review the presented options, the LMR confidentiality guidelines are linked for your convenience. On 

the teleconference, the following agenda will be discussed:

Agenda

• Options for Expanding the Published Negotiated Cattle Information:

1. Status quo

2. Keep the LM_CT154 0-14/15-30 head counts – add 5-Area beef type 0-14/15-30 prices

3. Discontinue 0-14/15-30 head count split on the LM_CT154 – price only

4. 0-15/15-30 day price spreads

5. Rounding head counts and prices

• Options to Change Delivery Period Windows (regulatory action required):

1. Adopt LMR beef delivery windows; LPS-126 form

2. Adopt week-long delivery periods

• Reporting 31+ Day Negotiated Cattle on Forward Contract (LM_CT153) Report

• New Comprehensive Report

• Open Discussion – New Stakeholder Ideas

• Closing
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Options for Expanding the Published Negotiated Cattle Information

To protect confidentiality, the first five options are some variation of data suppression. AMS hopes to find an 

option that provides the most useful information to stakeholders while still protecting confidentiality. AMS will 

leverage our math expertise for a more in-depth feasibility study once the stakeholder group has vetted these 

options. Any selected option would likely be published through our upcoming Weekly Comprehensive Cattle 

Report. This would allow implementation sooner and more cost effectively than through text reports.

Option 1 – Status Quo 

Currently, AMS shows a 0-14/15-30 head count split on the National LM_CT154 below. This is the only

delivery period head count split AMS publishes. Negotiated pricing on all reports is aggregated to 0-30 days.

• Pros: Confidentiality is assured, providing reliable head count splits going forward. A historical data 

set goes back to 2011.

• Cons: No price information for specific delivery periods. This pricing can only be speculated through 

CME quotes, the 0-30 negotiated prices, and these 0-14/15-30 head count proportions of the 

LM_CT154.

Option 2 – Keep LM_CT154 0-14/15-30 Head Counts and Add 5-Area Beef Type 0-14/15-30 Prices

The 0-14 and 15-30 head count split on the LM_CT154 is nationwide and includes dairybred cattle. In the 5-

Area LM_CT150 report, the beef type section is a subset of the LM_CT154. These data sets may differ enough

that we could have both head count splits and separate pricing for 0-14 and 15-30 categories while preserving

confidentiality. 

• Pros: Arguably the most informative of all the options.

• Cons: Possibly the least likely to pass confidentiality. If it would pass now, it remains the most likely 

to fail in the future if marketing patterns change. This option is dependent on nationwide dairybreds and 

beef types outside the 5-Area trading in the 15-30 category with sufficient quantity so the nationwide 

15-30 head count and 5-Area 15-30 pricing still preserve confidentiality.
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LM_CT154 head counts:

Weekly Comprehensive Cattle Report:

Option 3 – Suppress Head Count Splits

Discontinue the 0-14/15-30 head count split on the LM_CT154, and print both a 0-14 price and 15-30 price. 

• Pros: Confidentiality is strengthened with all delivery period head count splits removed, making future 

price quotes more reliable. 

• Cons: While deferred pricing information is available, the unknown extent of the trade can be 

detrimental to others using it as a pricing reference. Published prices could be realistically unattainable 

to others if they have occurred in insignificant quantities.

Weekly Comprehensive Cattle Report:

Option 4 – LM_CT154 Head Count Split Remains, With a 0-14/15-30 Day Price Spread 

Combine the LM_CT154 head count split and publish a price spread between the 0-14 and the 15-30 categories. 

Other price spreads such as the Choice/Select cutout value spread have proved valuable, for example. In the

Comprehensive Cattle Report, AMS is also preparing a section including other spreads (beef type/dairybred; 

cash/formula nets; formula base/formula nets). 

• Pros: Preserves volume data while identifying the price value between delivery periods. 

Confidentiality is not as vulnerable as quoting specific 0-14/15-30 prices. 

• Cons: Specific pricing of each delivery period is not provided. 

LM_CT154 head counts:
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Weekly Comprehensive Cattle Report:

Option 5 – Rounding

Round the 0-14/15-30 head counts and/or prices to protect confidentiality. The extent of rounding necessary 

would depend on whether both volume and price are rounded.

• Pros: Rounding is flexible and can be incorporated into other 15-30 options. Rounding thresholds can 

also be expanded when markets get thin so data can likely remain published; whereas, specific data is 

more likely to be withheld indefinitely when thinning markets increase the confidentiality issue. Since 

data is rounded both up and down, stakeholders pricing on rounded numbers consistently should even 

out over time. 

• Cons: While more information is available, it is not as specific. Stakeholder’s pricing with rounded 

numbers on an occasional basis will either gain or lose money due to the rounding process.

Price Rounding Example:

Head Count Rounding Example:
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Options to Change Delivery Period Windows

Option 1 – Adopting LMR Beef Delivery Period Windows from the LPS-126 Form Shown Below

• Pros: Provides consistency with LMR beef reporting, where these windows 

have provided good results. The same delivery windows for cattle and beef 

would save program maintenance costs for AMS in the long term. Using four 

delivery windows instead of two provides more flexibility in addressing the 

negotiated 30+ cattle. The fourth window is also open ended to capture any 

negotiated trade regardless of extended time frames. 

• Cons: Implementing this option would be a reporting change for packers, 

adding to their expense. AMS would also have short term programming 

expenses, but would benefit longer term. The delivery windows are wider 

than those used currently, which some stakeholders may not prefer. 

Option 2 – Adopting Week Long Delivery Periods 

Rather than split delivery windows according to specific days from the date of purchase, AMS could divide 

them by the scheduled week of slaughter. After the current week, each successive week would start on Sunday. 

• Pros: Eight delivery windows provides even more flexibility in establishing 

report parameters regarding delivery, and provides more adaptability 

regarding changing marketing trends. The last window is open ended to 

capture any negotiated trade regardless of extended time frames. Separating 

delivery windows by weeks instead of specific days is more consistent with 

how the industry schedules cattle. While head counts for specific weeks could 

not be published due to confidentiality, this large number of delivery windows 

presents the opportunity to introduce a weighted average delivery week factor

for industry analysis. The delivery factor would be calculated in the same 

manner as a weighted average price in the example below.
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• Cons: Specific 

pricing and head counts of 

each delivery period will 

probably never pass 

confidentiality when the trade 

is spread through this many 

windows.

Change in Reporting Negotiated Purchases Delivering Beyond 30 days

Background

When negotiated cattle are purchased to deliver beyond 30 days, Market News requires these trades to be 

submitted as forward contract purchases as the current delivery windows are 0-15 and 15-30 days. Reporting 

forward contract purchases to AMS requires a basis level value in the LPS-115C input form. Because these 

negotiated 30+ trades are a flat price without a basis, AMS has instructed packers to use a basis value of 0. 

Issue

The LM_CT153 National Prior Week Slaughter and Contract Purchases Report (section “D: Basis 

Distribution”) lists head counts for each basis level. Basis level transactions of 0.00 could be either negotiated 

30+ trades or forward contracts which actually do have a 0 basis. 

Short-Term Solution

Market News will soon implement a programming change to the LPS-115C input form allowing negotiated 30+ 

purchases to be submitted to AMS with a blank basis level, which will identify these trades as shown in the 

LM_CT153 report example below. 

Long-Term Solution

A more permanent solution lies with regulatory changes to make the final delivery window open ended, such as 

the LMR beef delivery window of 90+ days. This would allow the purchase to remain categorized as 

negotiated since the delivery windows can accommodate any given delivery date.

Negotiated 30+

Forward Contract 0 Basis