Organization for Competitve Markets Re-Calculates Damage from Cattle Market ManipulationThu, 10 Nov 2011 09:06:19 CST
The following article is a response from the Organization for Competitive Markets regarding R-CALF USA's formal complaint against the USDA, GIPSA and the Commodity Futures Trade Commission. Click here for more on R-CALF USA's complaint and their statement earlier this week.
"The Organization for Competitive Markets (OCM) noted on Wednesday, November 09, 2011 that R-CALF USA erred in its calculation of estimated financial harm to cattle producers allegedly caused by an unexplained, sharp decline in cash cattle prices from Friday, Oct. 28 through Tuesday morning, November 1, 2011. The timing of the decline coincides with Agricultural Secretary Tom Vilsack's official announcement slashing key provisions from the proposed GIPSA Rule.
According to OCM President, Fred Stokes, "R-CALF underestimated the loss to cattle producers by calculating a per hundred weight loss rather than a loss per animal. The actual loss to cattle producers in one day of trading was between $3,169,400 to $5,645,120!" This figure is based upon an average of a 1300 lb animal.
The alleged manipulation drove down the cost of the cattle and resulted in the initiation of a buying spree by corporate purchases of 92,000 cattle at the much lower price. However, as soon as the corporate purchases ceased buying, the futures market unexplainably jumped the limit up causing the market to immediately recover.
OCM completely concurs with R-CALF that the U.S. Department of Justice, the U.S. Department of Agriculture (USDA) Grain Inspection, Packers and Stockyards Administration (GIPSA) and the commodity Futures Trading Commission (CFTC) must immediately conduct an investigation into this alleged manipulation.
In conclusion, Stokes further pointed out, "This is the type of action that the Proposed GIPSA rule sought to prevent which is why OCM is extremely upset that the USDA gutted the rule." The Organization for Competitive Markets was organized as a national public policy research organization that works together, across all commodities, towards the common purpose of returning its food and agricultural sector to supply-demand based competition. The organization has worked through policy, education and research to enable all producers of food and fiber, regardless of size, to be able to receive a fair price for their products from a fair, open and competitive marketplace."
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