| CHICAGO, Sept 29
CHICAGO, Sept 29 Sales through an online U.S.
cattle auction will begin impacting the prices that top meat
packers pay for livestock next month, according to a U.S.
Department of Agriculture decision issued on Thursday - a move
that stoked traders' hopes for more transparent markets.
The agency said transactions at the weekly auction, called
the Fed Cattle Exchange, will be included in USDA reports that
companies such as Cargill Inc and Tyson Foods Inc
use to determine how much they should pay farmers for an
increasing percentage of animals sold.
It is the latest effort by government and industry officials
aimed at improving transparency in the cash and futures markets
for cattle, which have come under heightened scrutiny following
a sharp setback in prices in the second half of last year from
record levels in 2014.
The exchange launched in May and held several sessions
before halting activity in June. It resumed on Sept. 14.
"Any further transparency of cattle prices is a good thing
and for that reason I welcome it," Joe Ocrant, president of
Chicago-based Oak Investment Group and a cattle futures trader
for more than 40 years, said about the USDA's decision.
Cargill said it too supported the move, without providing
details. Tyson did not immediately respond to a request for
Transparency in livestock pricing has been a concern of
producers and traders for years.
In the past decade, farmers in the cash market have
increasingly signed deals months in advance to sell their
animals to meat packers, rather than negotiating a price for the
animals shortly before sending them to slaughter.
That has created a questionable system for pricing, some
farmers and traders have said, because packers often base prices
for the longer-term contracts partly on what the USDA reports
was paid in dwindling near-term negotiated deals.
Advance sales, struck under so-called formula contracts,
accounted for about 57 percent of sales last year, up from 33
percent a decade earlier, according to USDA data.
Cash sales negotiated closer to slaughter accounted for
about 21 percent in 2015, down from 52 percent in 2005, data
Including transactions from the online auction in the USDA
reports on near-term negotiated sales could help "legitimize"
the average price reported by the agency by increasing the
number of deals on which it is based, said Danny Jones,
president of Superior Livestock Auction, which owns the Fed
The exchange had sought to include its sales in the USDA
(Additional reporting by Theopolis Waters; Editing by Bill