CME Group has launched a new Boxed Beef Index, which is designed to provide the beef industry with better price discovery.
Tim Andriesen is the Managing Director of Ag Products for the CME Group. He says the idea for the index started with the pork cutout futures and options launched late in 2020.
?As you know, we launched the Pork Cutout futures and options in November of last year, which settles against the CME Pork Cutout Index. That?s something we?ve been publishing since 2015. On the heels of that product launch, we heard from a number of our customers that a similar pricing tool tailored to the cutout for beef and the cattle industry would very helpful. And that is exactly what the Boxed Beef Index does, it tracks daily value further down the supply chain, focusing on the prices paid for Choice and Select cuts of beef. This will provide market participants with even better price discovery, all the way from the producer to the consumer, and is the latest innovative tool designed to help all our customers manage their risk.?
Andriesen says the Boxed Beef Index will help provide a transparent daily price that farmers and producers, processors, packers, and wholesalers can use to track and forecast beef prices.
?One primary benefit is that the Index tracks the supply and demand dynamics of beef prices transacted in the cash market. Customers can compare the daily Boxed Beef Index pricing data to the USDA-reported prices of negotiated fed cattle, or the negotiated prices between the packer and feeder for the animals, to better manage their risk. Customers could also compare the Boxed Beef Index to our Pork Cutout Index to gain insight into customer demand. This allows the customer to better monitor the spread differential between fed cattle and the finished product.?
More information about the new CME Boxed Beef Index can be found at CME Group?s website.
