Volatile market prompts CME Group to raise live cattle margins

CME Group Inc, the world’s largest livestock futures market operator, has raised margin rates for live cattle futures for the second week in a row after dramatic swings in the market, an exchange spokesman told Reuters on Thursday.

Late on Wednesday the Chicago Mercantile Exchange raised its live cattle initial margins for speculators by 28.6 percent to $1,980 per contract from $1,540, effective at the close of business on Thursday.

Wednesday’s increase boosted the margin to the highest level since $2,200 in September 2014. It was the second-highest margin in the last five years.

The increase came after futures spiked up their 3-cents per lb maximum daily price limit on Tuesday, which was expanded to 4.5 cents the following session. Short covering in anticipation of a seasonal rebound in prices for wholesale beef and slaughter-ready, or cash, cattle sparked the rally.

Source: Reuters