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CORRECTED-REUTERS SUMMIT-CME plans no more changes to cattle contract for now

(In Oct. 11 story, corrects headline to show that CME plans no
more changes to cattle contract instead of that it declares
victory over cattle market volatility. No changes to story.)

By Tom Polansek

CHICAGO, Oct 11 (Reuters) - CME Group Inc plans no
further moves to reduce volatility in its cattle futures market,
after making a series of changes to rein in wild price swings
that drove away hedgers, a managing director said on Wednesday.

Over the past two years, the exchange operator, which owns
the Chicago Mercantile Exchange and other markets, has cut
trading hours, implemented new rules on order messaging and
taken other steps to limit volatility in its cattle market.

"Right now we don't think there's a problem to solve, so
trying to do something different wouldn't make a lot of sense,"
Tim Andriesen, CME's managing director of agricultural products,
said at the Reuters Commodities Summit.

"Generally the feedback we're getting from the industry is
it's working, let's leave it where it is."

Last year, U.S. cattle producers called on CME and federal
legislators to reduce volatility after cattle futures prices
fell sharply in 2015 from record levels in 2014. Ranchers said
big price swings had rendered the market ineffective, and some
cut back on hedging strategies used to manage the risk of owning

More recently, the percentage of hedgers in the market has
increased, Andriesen said, without providing specific data.

However, some traders said price swings continue to make it
difficult to enter or exit futures positions at times.

Joe Ocrant, president of Oak Investment Group and a cattle
futures trader in Chicago for nearly 50 years, said he has cut
by three-quarters the number of live cattle positions he trades
each day because of ongoing volatility.

In Nebraska, Brett Gottsch, managing partner for Gottsch
Cattle Co, said he too felt the market remained volatile. Also,
futures do not converge with cash prices as efficiently as they
should when futures contracts are expiring, he said.

"I would say that our market's not fixed," Gottsch said.

More time is needed to determine whether the problems have
been solved, said Sarah Calhoun, manager of government affairs
for the National Cattlemen's Beef Association, which represents
producers. Reductions in volatility have come over the last
several months, she said.

An online U.S. cattle auction, launched last year, has
helped limit volatility by improving transparency in what meat
packers pay for market-ready, or cash, cattle, traders said.
Those transactions give direction to the futures market.

Derek Sammann, CME's global head of commodities, said the
cash market needs to become even more transparent.
(Additional reporting by Theopolis Waters in Chicago; Editing
by David Gregorio)

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