SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested 

Registered Entity Identifier Code (optional): 20-005

Organization: Chicago Mercantile Exchange Inc. ("CME")

Filing as a: DCM SEF DCO SDR 

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): 01/07/20 Filing Description: Amendments to Increase the Initial 

Spot Month Position Limit of the Live Cattle Futures Contract

SPECIFY FILING TYPE 

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: 

New Product Please note only ONE product per Submission.

Certification § 40.2(a) 

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Official Product Name: 

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a) 

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a) 

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a), § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected: CME Live Cattle Futures

Rule Numbers: See filing.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Christopher Bowen 

Managing Director and Chief Regulatory Counsel

Legal Department

January 7, 2020

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: CFTC Regulation 40.4(a)/40.5(a). Request for Approval: Amendments to Increase 

Position Limits, Position Accountability and Reportable Level Table Relating to the 

Live Cattle Futures Contract. 

CME Submission No. 20-005

Dear Mr. Kirkpatrick:

Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) is requesting Commodity Futures Trading 

Commission (“CFTC” or “Commission”) approval to increase the Position Limits, Position Accountability 

and Reportable Level Table (the “Table”) relating to the Live Cattle Futures (Rulebook Chapter 101; 

Commodity Code: 48) contract (the “Contract”) effective for trade date Monday, March 2, 2020 and 

commencing with the April 2020 contract month and beyond.

Specifically, the Exchange is requesting approval to implement an increase in the initial spot-month (or 

“spot”) speculative position limit from 450 contracts to 600 contracts (See Appendix A). 

Background:

Since 2017, the Exchange has approved and added six new stockyards for live delivery of cattle: Burwell, 

NE; Dalhart, TX; Kearney, NE; Lexington, NE; Sterling, CO; and West Point, NE. In doing so, it has 

increased the average 13-day live grading capacity from 3,003 contracts to 3,783, or by 26%.

The Exchange’s review of deliverable supply of the Contract shows that there is ample daily live grading 

capacity at the Exchange-approved stockyards during the period at which the initial spot limit is 

applicable. Specifically, the Exchange’s proposed initial spot month limit of 600 contracts would be in 

effect at the close of trading on the first business day following the first Friday of the contract month and 

reduced to 300 contracts at the close of trading on the business day immediately preceding the last 5 

trading days of the contract month. Immediately prior to the spot limit step-down from the proposed level 

of 600 to 300 contracts, the available delivery window is comprised of 13 delivery days, or 5 business 

days prior to LTD plus business days eight through 14 following LTD, calculated inclusively. The 

Exchange calculated the average of the consecutive 13-day live grading capacity totals to be 3,783 

contracts (see table below). The Exchange’s proposed initial spot month position limit of 600 contracts 

represents 15.86% of the estimated deliverable supply based on the 13-day delivery window.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Consecutive 13-Day 

Combination Daily Grading Capacity

Total 

Grading 

Capacity

M-T-W-TH-F:M-T-W-THF:M-T-W 270 370 195 270 350 270 370 195 270 350 270 370 195 3,745

T-W-TH-F:M-T-W-THF:M-T-W-TH 370 195 270 350 270 370 195 270 350 270 370 195 270 3,745

W-TH-F:M-T-W-TH-F:MT-W-TH-F 195 270 350 270 370 195 270 350 270 370 195 270 350 3,725

Th-F:M-T-W-TH-F:M-T-WTH-F:M 270 350 270 370 195 270 350 270 370 195 270 350 270 3,800

F:M-T-W-TH-F:M-T-WTH-F:M-T 350 270 370 195 270 350 270 370 195 270 350 270 370 3,900

Avg 3,783 

CFTC Regulation 150.5(b)(1) states, in part, that:

“For physical delivery contracts, the spot month limit level must be no greater than one-quarter of 

the estimated spot month deliverable supply...”

In recognition of the additional capacity that has been added since 2017, the Exchange believes that an 

increase to the initial spot month position limit of 450 contracts to 600 is appropriate. 

The Exchange conducted market outreach regarding the amendments. Market participants were 

generally supportive of or indifferent regarding an increase to the initial spot-month speculative limit. One 

market participant opined that the proposal could potentially provide speculative long position holders 

influence. Upon consideration of feedback from the market participants, the Exchange concluded that the 

increase in the initial spot-month limit will not result in any market imbalance as speculators (as well as 

commercials) may be long or short. Additionally, the Exchange shall continue to maintain a position limit 

of 300 contracts at the close of trading on the business day prior to the last five (5) trading days of the 

contract month and a position limit of 200 contracts at the close of trading on the business day prior to the 

last two (2) trading days of the contract month during the last five (5) trading days. 

The Exchange reviewed the designated contract market core principles (“Core Principles”) as set forth in 

the Commodity Exchange Act (“CEA” or “Act”) and identified that the following Core Principles may be 

impacted by this initiative as follows:

• Contracts Not Readily Subject to Manipulation: The Contracts are not readily subject to 

manipulation as illustrated in the Cash Market Overview and Analysis of Deliverable Supply 

attached herein. 

• Position Limits or Accountability: The speculative position limits for the Contracts as 

demonstrated in this submission are consistent with the Commission’s guidance. 

• Availability of General Information: The Exchange will make publicly available the details of the 

increase in the initial spot position limit by publishing a Market Surveillance Notice (“MSN”) to the 

market. The MSN will be available on CME Group’s website.

Pursuant to Section 5c(c) of the Act and CFTC Regulations 40.4(a) and 40.5(a), the Exchange hereby 

certifies that the amendments comply with the Act, including regulations under the Act. 

The Exchange certifies that this submission has been concurrently posted on the Exchange’s website at

http://www.cmegroup.com/market-regulation/rule-filings.html.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Should you have any questions concerning the above, please contact the undersigned at 212-299-2200 

or via e-mail at CMEGSubmissionInquiry@cmegroup.com.

Sincerely,

/s/ Christopher Bowen

Managing Director and Chief Regulatory Counsel

Attachments: Appendix A – Amendments to CME Chapter 5 – Position Limits, Position Accountability 

and Reportable Level Table (effective upon approval) (under separate cover)

Appendix B – Amendments to CME Chapter 5 – Position Limits, Position Accountability

and Reportable Level Table (effective February 28, 2020) (attached under separate cover)

Appendix C – Cash Market Overview and Analysis of Deliverable Supply
4

Appendix A

CME Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Position Limit, Position Accountability, and Reportable Level Table 

in Chapter 5 of the CME Rulebook

(Effective Upon Approval)

(under separate cover)
5

Appendix B

CME Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Position Limit, Position Accountability, and Reportable Level Table 

in Chapter 5 of the CME Rulebook

(Effective February 28, 2020) 

(under separate cover)
6

Appendix C

Cash Market Overview and Analysis of Deliverable Supply

Live Cattle Futures

Overview:

Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) staff conducted a review of the cash market 

underlying its Live Cattle Futures contracts (“Contract”) which is defined as beef bred steers and heifers 

sold from feedlots to livestock yards (live-graded deliveries) or slaughter plants (carcass-graded 

deliveries) and herein referred to as “fed cattle”. 

Background: 

The Contract is a physically-deliverable futures contract whose terms are satisfied by the delivery of fed 

cattle meeting contract specifications that have been transported to and then graded at approved 

locations. More specifically, the contract allows for the delivery of qualified fed steers or heifers to either 

CME-approved stockyards or CME-approved slaughter plants. A short position holder initiates the 

Contract’s delivery process by tendering a certificate of delivery to the Clearing House designating a 

CME-approved stockyard to which the cattle will be tendered for delivery and the feedlot from which the 

cattle originate. The long position holder who ultimately receives the delivery notice may accept either a 

live-graded delivery at that designated stockyard or may alternatively choose to arrange for a carcassgraded delivery at a CME-approved slaughter plant corresponding to the designated stockyard or to a 

CME-approved slaughter plant within 225 road miles of the short position holder’s originating feedlot. The 

delivery period – defined herein as the timeframe in which a certificate of delivery may be tendered: the 

first notice day through the last notice day – for an expiring month of the Contract generally lasts roughly 

one calendar month.1

According to the National Weekly Slaughter Cattle – Committed and Delivered Cattle (USDA LM_CT142)

report published by the United States Department of Agriculture (“USDA”), roughly 22.8 million head of 

domestically sourced cattle that had been placed on feed (including non-beef bred cattle) were 

slaughtered (or “delivered” in USDA report) in the United States in 2018. Of that annual number, roughly 

5.7 million head of cattle (steer or heifer only) were purchased on a spot (or “negotiated” in USDA report) 

basis and were delivered live or dressed. Of those 5.7 million head, roughly 14% were transacted outside 

of the main “5-Area” region (defined further in the “Data Sources section of this document), bringing the 

number down to roughly 4.9 million head. Further, eliminating roughly 6.6%2 of cattle that were either too 

light (less than 1,050 pounds) or too heavy (greater than 1,350 pounds for heifers or 1,600 pounds for 

steers), leaves roughly 4.58 million head. In summary, roughly 20.1% of cattle slaughtered in 2018 would 

fit the description of what CME would estimate as cattle that were available on a spot basis, were 

geographically located in a region containing at least one Contract delivery point stockyard and would 

have met the Contract’s specifications for weight. 

The vast majority of the domestic fed cattle supply is committed to slaughter plants on a non-spot basis 

(i.e. a forward contract, a formula-based contract, etc.) and therefore would typically not be in position to 

be delivered to fulfill a futures contract obligation3. Some classes of cattle such as bulls and cows are not 

representative of the broader cash fed cattle market due to quality, age, and size differences relative to 

 

1 Rule 10104.A in CME Chapter 101 indicates that Certificates of Delivery can be tendered no sooner than the business day 

following the first Friday of the contract month and not after the third business following contract expiration. For example, the August 

2017 Live Cattle Futures contract had a first notice day of August 7, 2017 and a last notice day of September 6, 2017.

2

In order to account for weight variance, CME used the standard deviation calculated in the study done by the University of 

Minnesota (http://ageconsearch.umn.edu/bitstream/11841/1/pa03di01.pdf) and applied that to the three-year average live weights 

from the USDA 5 Area Monthly Weighted Average Direct Slaughter Cattle (USDA LM_CT180). 

3 Some slaughter plant operators have indicated that their formula agreements with feedlots include an option that allows the feedlot 

to deliver the cattle versus futures positions if market conditions warrant. However, we are not including formula transacted cattle in 

our deliverable supply estimate as industry sources indicate this option is rarely utilized.
7

that of steers and heifers and are therefore not deliverable to satisfy the Contract and are not used in this 

analysis. 

The sellers of fed cattle are feedlot operators and the buyers of fed cattle are typically slaughter plant 

operators (“packers”). Most feedlots are family or individually operated, indicating a low level of industry 

concentration at the producer level.4 However, there is a high amount of industry concentration amongst 

the beef packers: according to the National Cattlemen’s Beef Association (“NCBA”), the four largest beef 

packers represented roughly 90% of the daily beef slaughter capacity among the top ten largest beef 

packers in the U.S. in 2015.5

The fed cattle market is primarily domestic: only about 1% of slaughtered steers and heifers in the U.S. 

were imported by packers in 2018 according to the National Weekly Slaughter Cattle – Committed and 

Delivered Cattle report. According to the USDA Foreign Agricultural Service, only 243,795 head of any 

type of cattle were exported out of the U.S. in 2018, representing only a tiny fraction of the total inventory 

of U.S. cattle.

Fed Cattle are primarily graded in two ways that affect their economic value: quality and yield. Quality 

grading reflects the expected eating characteristics of the meat (tenderness, flavor, etc.) once it is 

cooked. The yield grade reflects the estimated amount of lean, edible meat produced by a carcass.6

Inspecting fed cattle on a carcass-graded basis leads to more precise grading because the grader can 

review the actual carcass, allowing for more accurate premiums and discounts to be assigned to the base 

price paid for the cattle by the packer. When cattle are inspected on a live-graded basis, the grader must 

make estimations on future carcass grading outcomes based on external visual indicators when 

inspecting the live animal. According to the 5-Area Weekly Weighted Average Direct Slaughter Cattle 

(LM_CT150) report, 67% of fed cattle marketed on a spot / negotiated transaction were priced on a livegraded basis between 2016 and 2018, while only 13% of cattle marketed on a formula price agreement 

were graded on a live basis between 2016 and 2018 (LM_CT145 5 Area Weekly Direct Slaughter Cattle –

Formula, Grid and Contract Purchases report).

The Exchange believes that the best method for assessing the availability of fed cattle meeting Contract 

specifications is to measure the observed transactions of fed cattle between feedlots and packers over 

time. CME believes that these transactions are indicative of available market-ready fed cattle at any given 

time given their non-storable nature. The purchases of cattle by packers are subject to livestock 

mandatory price reporting legislation and therefore the Exchange’s analysis of the deliverable supply of 

fed cattle makes use of mandatorily reported volumes of packer purchases of all grades of beef bred 

steers and heifers priced on either a live or dressed basis as aggregated and published by the USDA 

Agricultural Marketing Service (“AMS”) division on a monthly basis.7

Live Cattle Futures Delivery Capacity: 

The delivery territories for delivery against the Live Cattle futures contract are Colorado; 

Iowa/Minnesota/South Dakota; Kansas; Nebraska; and Texas/Oklahoma/New Mexico. Cattle may be 

delivered at par at any of the approved stockyard or slaughter plants with one exception currently: any 

deliveries whose certificates of delivery were originally tendered for delivery at Worthing, SD to satisfy an 

October futures contract will be made at a $1.50/cwt discount to the short position holder making 

delivery.8

 

4 According to the 2012 USDA Census of Agriculture, “In 2012, 80 percent of feedlots were family or individually operated.” 

https://www.agcensus.usda.gov/Publications/2012/Online_Resources/Highlights/Cattle/Cattle_Highlights.pdf.

5 See page 48 of this NCBA document: 

http://www.beefusa.org/CMDocs/BeefUSA/Producer%20Ed/2015%20CattleFax%20section.pdf.

6 For more information on beef grading, it is suggested to read Beef Grading by Daryl Tatum of Colorado State University:

http://www.beefresearch.org/cmdocs/beefresearch/beef%20grading.pdf. 

7 Legislation regarding the mandatory reporting of cattle can be found in 7 CFR Part 59, Subpart B - Cattle Reporting: 

https://www.gpo.gov/fdsys/pkg/CFR-2016-title7-vol3/pdf/CFR-2016-title7-vol3-part59-subpartB.pdf.

8 Please see CME Submission No. 16-304 for further information on the discount applied to deliveries originally tendered to a 

stockyard in Worthing, SD in the October contract month: http://www.cmegroup.com/market-regulation/rule-filings/2016/08/16-

304.pdf.
8

USDA AMS provides graders at the stockyard delivery points at the scheduled time of delivery to facilitate 

deliveries where the long position holder receiving delivery has selected that final settlement and transfer 

of ownership of the cattle be completed on a live-graded basis. The USDA provides input to the 

Exchange on their staffing as well as each stockyard’s infrastructure (i.e. scales, employees) which are 

factors in our self-imposed daily limits on the maximum number of contracts that can be delivered on any 

given day to each stockyard. Based on delivery constraints identified by the USDA, CME instituted a daily 

limit on how many certificates of delivery could be tendered for delivery at any given stockyard. The daily 

limits at each stockyard are based on USDA grader estimations on the size and quality of the stockyard 

as well as their own staffing availability for grading. It is important to note that the daily maximum number 

of contracts allowed per stockyard by the Exchange is typically lower than the stockyards’ actual 

maximum daily capacity. CME believes that this helps remove the risk of delivery congestion and 

promotes an orderly delivery process for the Contract. 

Each delivery point stockyard conducts feeder cattle sales and other types of cash market auctions each 

week where the facility is unavailable to provide capacity in support of deliveries for the Contract. It is the 

responsibility of the delivering short position holder to ensure that the delivery point stockyard will be able 

to receive a Contract delivery prior to tendering a delivery certificate to that stockyard. However, the 

stockyards themselves provide an expected schedule to the Exchange of days in which they expect that 

they will be unable to facilitate Contract deliveries, and the Exchange communicates that schedule to the 

market as it changes.9

Table 1 in the appendix of this document lists the weekly stockyard delivery capacity for the Contract and 

blackout days as communicated to the Exchange by the stockyards.

The approved slaughter plant delivery points for the Contract do not have a limit on the number of 

deliveries that they may receive because the short position holder will be able to make delivery at a 

stockyard even if the long is unable to schedule a delivery at any of the plants associated with that 

stockyard. It is the responsibility of the long position holder to schedule a delivery to be received at a 

slaughter plant if the long prefers for the final settlement of the delivery to be done by a carcass grading 

instead of by live grading at the originally tendered stockyard. Slaughter plant grading capacity is not an 

issue because each plant is staffed by USDA meat graders on a daily basis as part of their normal 

business operations. Because all deliveries must be tendered to a stockyard to initiate the delivery 

process, the capacity of the stockyard accounts for the delivery constraint irrespective of whether the 

ultimate delivery consists of live-graded or carcass-graded beef cattle. Further, CME delivery data shows 

that there were 357 delivered loads between 2016 and 2018. Of those, 337 (94%) were delivered on a 

live-graded basis while 20 (6%) were delivered carcass-graded. As indicated in the “background” section 

above, the majority of spot / negotiated fed cattle transactions are priced on a live FOB basis, indicating 

that it is expected for stockyards to receive the majority of Contract deliveries.

Data Sources: 

CME’s analysis of the deliverable supply of fed cattle makes use of data provided by USDA AMS within 

its 5 Area Monthly Weighted Average Direct Slaughter Cattle – Negotiated report.10

A monthly data series is used because the delivery period for an expiring month of the Contract generally 

lasts roughly one calendar month. The “5 Area” geographic region – which is comprised of the 

“Texas/Oklahoma/New Mexico”, “Kansas”, “Nebraska”, “Colorado”, and “Iowa/Minnesota” sub-regions – is 

used because it most closely represents the geographical area where fed cattle are realistically expected 

to physically be in a position to be delivered to a delivery point stockyard. Only negotiated cattle were 

used in this analysis because all other forms of marketing fed cattle result in those cattle being committed 

to another party and therefore reasonably assumed to be unavailable for delivery by a short position 

holder of the Contract. Steers and heifers priced on both a live or dressed basis are used in this analysis 

because both steers and heifers are deliverable and can be graded on either a live or a carcass/dressed 

basis to satisfy Contract delivery terms. All grades are utilized in this analysis because the four main 

USDA quality grades of cattle (prime, choice, select, standard) and most predominant yield grades 

 

9 Please see the latest such notice here: https://www.cmegroup.com/clearing/files/black-out-days-due-to-advisories.pdf

10 The most current “5 Area monthly Weighted Average Direct Slaughter Cattle – Negotiated” Report can be found at this static 

location on the USDA’s website: https://www.ams.usda.gov/mnreports/lm_ct180.txt.
9

(grades 1 – 5) are deliverable and the terms of the Contract make use of the most current USDA 

published National Weekly Direct Slaughter Cattle – Premiums and Discounts report to assess quality 

grade and yield grade premiums and discounts on delivered cattle accordingly.

USDA AMS maintains a historical database of its mandatory price reports on its website at the following 

location: https://mpr.datamart.ams.usda.gov/.

Please see Table 2 in the Appendix at the end of this document for a list of delivery point stockyard 

locations and their associated geographical cash market regions, all of which are represented within 5 

Area price reports published by USDA AMS.

Calculation Methodology for Cattle Available for Delivery Pursuant to Contract Specifications: 

The following steps using the 5 Area Monthly Weighted Average Direct Slaughter Cattle – Negotiated 

report allow for the estimate of the fed cattle available for delivery pursuant to Contract specifications: 

1. Obtain the head count and average weight for “Total all grades” for:

a. Live FOB Basis – Beef Breeds, Steers

b. Live FOB Basis – Beef Breeds, Heifers

c. Dressed Delivered Basis – Beef Breeds, Steers

d. Dressed Delivered Basis – Beef Breeds, Heifers

2. Convert the dressed weights to ‘live equivalent weights’ by dividing the dressed weights by 63% 

(the par yield of carcass graded cattle in the Contract).

3. Multiply each category’s head count by its live-equivalent weight to get the category’s total liveequivalent weight for the month, then add each category’s total monthly live-equivalent weight 

together to get a monthly total live equivalent weight.

4. Divide the total live equivalent weight for the month by 40,000 lbs. (the size of the futures 

contract) to determine the number of cattle available for delivery during a given contract month in 

contract equivalents. 

Analysis of Deliverable Supply:

Please see Table 3 in the Appendix at the end of this document for a monthly estimate of fed cattle 

available for delivery pursuant to Contract specifications for the previous three years using the data and 

calculation methodology described above.

The Exchange estimates that the average monthly availability of fed cattle meeting Contract 

specifications over the previous three years was equivalent to 11,064 contracts. The Contract currently 

has three spot month position limits: 1) 600 contracts on the close of trading on the first business day 

following the first Friday of the contract month, which is 5.4% of average monthly availability of fed cattle 

meeting Contract specifications, and 2) 300 contracts on the close of trading on the business day 

immediately preceding the last 5 trading days of the contract month, which is 2.7% of average monthly 

availability of fed cattle meeting Contract specifications, and 3) 200 contracts on the close of trading on 

the business day immediately preceding the last 2 trading days of the contract month, which is 1.8% of 

average monthly availability of fed cattle meeting Contract specifications. 

However, the ability to deliver cattle to fulfill Contract obligations is constrained by the daily live grading 

capacity limits imposed on the approved stockyards by the Exchange. Therefore, the Exchange 

measures its estimation of deliverable supply of fed cattle to fulfill Contract delivery obligations based on 

the maximum stockyard capacity permitted by the Exchange, inclusive of ‘blackout’ days in which the 

stockyards self-report themselves as not being available to facilitate deliveries as noted more specifically 

below.

The last tender date is 12 p.m. on the Business Day following the Last Trade Date (“LTD”). This allows 

the short to schedule delivery on one of four business days (business days 8 through 11 following LTD). 

Additionally, if the short is unable to obtain clearance from an approved livestock yard to make live 
10

delivery between Business Days eight through eleven following LTD, the short can request an extension 

from the Exchange and, if granted, delivery may occur no later than the 14th Business Day after LTD. 

Inclusive of potential extension days, a delivering short has a total of seven consecutive business days 

after LTD to schedule delivery at an approved livestock yard (business days eight through 14 following 

LTD). 

Therefore, the Exchange based its estimation of deliverable supply on the maximum livestock yard 

capacity permitted by the Exchange during the window available for delivery at the livestock yards 

inclusive of blackout days in which the livestock yards self-report themselves as not being available to 

facilitate deliveries. Because the total daily available capacities for all approved livestock yards vary by 

day, the Exchange determined to measure the delivery window as an average of all available 

combinations of consecutive delivery days for the number of delivery days in that window. 

The deliverable supply is most restrictive after LTD given that the delivery window for contracts tendered 

following LTD is restricted to up to seven (7) business days, or business days eight through 11 after last 

trade date plus 3 additional days (i.e., business days eight through 14 following LTD). The Exchange 

calculated the average of the consecutive seven-day live grading capacity totals to be 2,037 contracts 

(see Exhibit A, Table 4). The Exchange’s final spot month position limit of 200 contracts, which is in 

effect at the close of trading on the business day immediately preceding the last 2 trading days of the 

contract month, represents 9.82% of the estimated deliverable supply based on the 7-day delivery 

window.

The Exchange’s initial spot month limit of 600 contracts is in effect at the close of trading on the first 

business day following the first Friday of the contract month and is reduced to 300 contracts at the close 

of trading on the business day immediately preceding the last 5 trading days of the contract month. 

Immediately prior to the spot limit step-down from 450 to 300 contracts, the available delivery window is 

comprised of 13 delivery days, or 5 business days prior to LTD plus business days eight through 14 

following LTD, inclusive. The Exchange calculated the average of the consecutive 13-day live grading 

capacity totals to be 3,783 contracts (see Exhibit A, Table 6). The Exchange’s initial spot month position 

limit of 600 contracts represents 15.86% of the estimated deliverable supply based on the 13-day delivery 

window. 

The Exchange’s subsequent spot month limit of 300 contracts is in effect at the close of trading on the 

business day immediately preceding the last 5 trading days of the contract month and is reduced to 200 

contracts at the close of trading on the business day immediately preceding the last 2 trading days of the 

contract month. Immediately prior to the spot limit step-down from 300 to 200 contracts, the available 

delivery window is comprised of 10 delivery days, or 2 business days prior to LTD plus business days 

eight through 14 following LTD, inclusive. The Exchange calculated the average of the consecutive 10-

day live grading capacity totals to be 2,910 contracts (see Exhibit A, Table 5). The Exchange’s 

subsequent spot month position limit of 300 contracts represents 10.31% of the estimated deliverable 

supply based on the 10-day delivery window.
11

Exhibit A

Table 1: Maximum Daily Grading Capacity (Contract Equivalents)

Stockyard Mon Tue Wed Thu Fri Weekly

Amarillo, TX 60 60 60 60 240 

Burwell, NE 15 15 15 45 

Clovis, NM 30 30 30 30 120 

Dalhart, TX 15 15 15 15 60 

Dodge City, KS 40 40 40 40 160 

Kearney, NE 15 15 15 45 

Lexington, NE 20 20 20 60 

Ogallala, NE 25 25 25 75 

Sterling, CO 15 15 30 

Syracuse, KS 25 25 25 25 100 

Texhoma, OK 30 30 30 30 120 

Tulia, TX 30 30 30 30 120 

West Point, NE 20 20 20 60 

Worthing, SD 60 60 60 180 

Wray, CO 10 10 10 10 40 

Total Daily Capacity 

(inclusive of blackout dates) 270 370 195 270 350 1,455 

Table 2: USDA Cash Reporting Regions & Associated Stockyard Delivery Points

USDA Cash Reporting Region Associated Stockyard Delivery Points

Iowa / Minnesota Worthing, SD

Colorado Sterling, CO; Wray, CO

Nebraska Burwell, NE; Ogallala, NE; West Point, NE; 

Kearney, NE; Lexington, NE

Kansas Dodge City, KS; Syracuse, KS

Texas / Oklahoma / New Mexico Amarillo, TX; Clovis, NM; Texhoma, OK; Tulia, 

TX; Dalhart, TX

5-Area Representative of all delivery points
12

Table 3: Monthly negotiated steers and heifers by contract month (in Contract Equivalents, or 40,000 live 

equivalent pounds)

Table 4: Consecutive Seven-Day Grading Capacity Totals (in Contract Equivalents)

Contract 

Month

Contract 

Year Dressed Heifers Dressed Steers Live Heifers Live Steers Total

2016 1,330 2,415 2,516 3,333 9,594

2017 1,057 1,770 2,954 6,241 12,022

2018 779 1,701 2,595 4,459 9,533

2016 1,051 3,110 2,086 4,043 10,290

2017 735 2,594 2,504 4,800 10,634

2018 736 2,108 2,629 4,963 10,436

2016 1,053 2,774 2,144 5,693 11,664

2017 981 2,907 2,457 5,726 12,072

2018 670 2,190 2,088 5,216 10,164

2016 1,225 3,530 2,618 5,911 13,284

2017 884 2,609 2,214 6,102 11,810

2018 898 2,926 2,537 8,000 14,362

2016 1,123 2,202 2,414 4,605 10,344

2017 910 1,846 2,680 5,481 10,917

2018 1,202 3,134 2,569 5,577 12,481

2016 1,316 2,824 2,620 4,204 10,964

2017 886 1,695 2,464 5,005 10,050

2018 813 1,641 1,870 4,203 8,528

981 2,443 2,442 5,198 11,064

Dec

3-Year Avg.

Feb

Apr

Jun

Aug

Oct

Consecutive 7-Day 

Combination

Total Grading 

Capacity

M-T-W-TH-F:M-T 270 370 195 270 350 270 370 2,095

T-W-TH-F:M-T-W 370 195 270 350 270 370 195 2,020

W-TH-F:M-T-W-TH 195 270 350 270 370 195 270 1,920

Th-F:M-T-W-TH-F 270 350 270 370 195 270 350 2,075

F:M-T-W-TH-F:M 350 270 370 195 270 350 270 2,075

Avg 2,037

Daily Grading Capacity
13

Table 5: Consecutive 10-Day Grading Capacity Totals (in Contract Equivalents)

Table 6: Consecutive 13-Day Grading Capacity Totals (in Contract Equivalents)

Consecutive 10-Day 

Combination

Total 

Grading 

Capacity

M-T-W-TH-F:M-T-W-TH-F 270 370 195 270 350 270 370 195 270 350 2,910

T-W-TH-F:M-T-W-TH-F:M 370 195 270 350 270 370 195 270 350 270 2,910

W-TH-F:M-T-W-TH-F:M-T 195 270 350 270 370 195 270 350 270 370 2,910

Th-F:M-T-W-TH-F:M-T-W 270 350 270 370 195 270 350 270 370 195 2,910

F:M-T-W-TH-F:M-T-W-TH 350 270 370 195 270 350 270 370 195 270 2,910

Avg 2,910

Daily Grading Capacity Consecutive 13-Day 

Combination

Total 

Grading 

Capacity

M-T-W-TH-F:M-T-W-TH-F:M-T-W 270 370 195 270 350 270 370 195 270 350 270 370 195 3,745

T-W-TH-F:M-T-W-TH-F:M-T-W-TH 370 195 270 350 270 370 195 270 350 270 370 195 270 3,745

W-TH-F:M-T-W-TH-F:M-T-W-TH-F 195 270 350 270 370 195 270 350 270 370 195 270 350 3,725

Th-F:M-T-W-TH-F:M-T-W-TH-F:M 270 350 270 370 195 270 350 270 370 195 270 350 270 3,800

F:M-T-W-TH-F:M-T-W-TH-F:M-T 350 270 370 195 270 350 270 370 195 270 350 270 370 3,900

Avg 3,783

Daily Grading Capacity