Agricultural Advisory Committee

CFTC Livestock Task Force

September 24, 2020
Agricultural Advisory Committee 20

Disclaimer

The views expressed represent the views of the Livestock Task Force. 

The views expressed do not necessarily reflect the views of the 

Commodity Futures Trading Commission (“CFTC” or “Commission”), 

any of the Commissioners, the Division of Market Oversight, the 

Division of Enforcement, the Office of Legislative and Intergovernmental 

Affairs or other staff at the Commission.

Consistent with Section 8(a) of the CEA, we do not include any data or 

information that would separately disclose the business transactions or 

market positions of any person or trade secrets or names of customers.

While every effort has been made to ensure accuracy, the report 

includes assumptions and data interpretations. 
Agricultural Advisory Committee 21

Overview of the CFTC Livestock Task Force 

In April 2020, Chairman Tarbert created and announced the CFTC 

Livestock Task Force.

The task force is staffed by economists and analysts from the 

CFTC’s Division of Market Oversight, Division of Enforcement, and 

by the Office of Legislative and Intergovernmental Affairs. 

To ensure our markets are working for American agriculture during 

these challenging times, the task force monitored activity around 

major market moving events, and engaged experts, regulators, 

federal agencies, and market participants.
Agricultural Advisory Committee 22

COVID-19 Impact on Agricultural Markets

U.S. agriculture suffered extensive impacts due to COVID-19, 

especially Live Cattle, Feeder Cattle and Lean Hogs futures 

and cash markets. This was the result of a confluence of 

factors, including: 

 Supply/demand imbalances

 Supply chain disruptions

 U.S. – China trade deal

Government direct payments helped to cushion a historic bearish six month period for agriculture.
Agricultural Advisory Committee 23

Cattle (Cash & Futures) and Boxed Beef Prices (Weekly)

Cattle cash and futures prices dropped, stabilized and then recovered slowly.

Source: USDA and CME 

Boxed beef prices more than doubled (the week of May 8), 

hitting an all-time record of $475 cwt. 

75

125

175

225

275

325

375

425

475

1/17 2/7 2/28 3/20 4/10 5/1 5/22 6/12 7/3 7/24 8/14 9/4

$/cwt.

Boxed Beef Choice Cut-Out 5-Area Negotiated Cash Cattle

Nearby Futures Contract
Agricultural Advisory Committee 24

U.S. Cattle Slaughter (Weekly)

Slaughter numbers for cattle increased by almost 45% since the Spring lows. 

Source: USDA

COVID-19 closed packing plants. Beef processing capacity fell 

by 35-40%. Packer demand for cattle fell sharply.

400

450

500

550

600

650

700

1/11 2/1 2/22 3/14 4/4 4/25 5/16 6/6 6/27 7/18 8/8

Thousand Head

2020 2019 2018
Agricultural Advisory Committee 25

Percent Change in Ag Futures Prices Since January 2, 2020

Livestock prices up from April lows, but still down 15-23% from January prices.

Source: ProphetX

Lean Hog futures fell by 40%. Live Cattle futures hit 10 year low.

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

1/2

1/111/201/29

2/7

2/162/25

3/5

3/143/23

4/1

4/104/194/28

5/7

5/165/25

6/3

6/126/216/30

7/9

7/187/27

8/5

8/148/23

9/1

% Change in futures price

Live Cattle Lean Hogs Corn Soybeans
Agricultural Advisory Committee 26

Historical Volatility

Volatility subsided since April peak, but remains elevated relative to January.

Source: Bloomberg

Lean Hog futures volatility exceeded 70%. Live Cattle futures 

approached 60%. 

0

10

20

30

40

50

60

70

80

1/2

1/111/201/29

2/7

2/162/25

3/5

3/143/23

4/1

4/104/194/28

5/7

5/165/25

6/3

6/126/216/30

7/9

7/187/27

8/5

8/148/23

9/1

Annualized Percent

Live Cattle Lean Hogs Corn Soybeans
Agricultural Advisory Committee 27

CME Live Cattle Futures & Options Market Composition & Price

Managed money sold when prices fell, bought when prices rose prices rose.

Source: ProphetX, CFTC

As prices declined, Managed Money traders reduced net long 

positions and Commercials reduced net short positions.

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

60

70

80

90

100

110

120

130

140

1/2

1/141/27

2/6

2/19

3/2

3/123/24

4/3

4/164/28

5/8

5/20

6/2

6/126/24

7/7

7/177/298/108/20

9/1

Net Positions (contracts of 

40,000 pounds)

Prices (cents per pound)

Managed Money Commercials Most Active Price
Agricultural Advisory Committee 28

Summary of CFTC Livestock Task Force Activities

 Enhanced surveillance of Livestock expirations

 Provided frequent updates on internal analysis with Commissioners

 Shared insights with other government agencies

 Supported enforcement activity
Agricultural Advisory Committee 29

QUESTIONS