CME Customer Letter
As you are aware, on March 1, 2013 a series of automatic federal spending cuts, known as sequestration, are set to begin. As a valued customer, we wanted you to be aware this is an issue we are closely monitoring, as it’s possible mandatory spending cuts – should they begin on March 1 – could have an impact on the physical delivery and cash settlement mechanisms of certain CME livestock and dairy products. In addition, the budget cuts could result in the disruption of USDA reports that are used in the daily calculation of the CME Feeder Cattle Index and CME Lean Hog Index and the monthly calculations used to determine settlement prices for CME Dairy futures products.
As the CME Live Cattle contract utilizes USDA grading/inspection in the delivery process, a furlough of USDA staff may require the Exchange to modify in accordance with Exchange rules the current operational process around delivery/settlement of these products. In addition, CME Group’s cash- settled livestock and dairy products could also be impacted in the event the data used to compile these indexes is unavailable. Finally, CME Group’s spot call dairy markets could be impacted in the event USDA grading/inspection staff is unavailable effective on March 1, 2013.
Sequestration Customer Letter (PDF 50 KB)
