It was refreshing to find that FINALLY someone, like the child in the kid's story, has the guts to say the emperor has no clothes. Thanks to Derrell Peel of OK State.

Article from Drovers in my email this am.

quotes from Derrell's article:

"Feeder futures have become increasingly volatile in ways that often appear unrelated to market fundamentals. Erratic futures price movements and increased basis volatility makes it difficult or impossible for the industry to use feeder futures for its two primary roles of risk management and price discovery."

"A growing proportion of the outside (non-hedging) liquidity in feeder futures is, by many accounts, from sources motivated primarily by portfolio management rather than actually speculating based on feeder cattle market fundamentals.  Aided by computers and mechanical trading strategies, this type of activity tends to result in movements into and out of futures markets quickly and violently; resulting in increasing market volatility as underlying liquidity is exhausted."

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Are the live cattle futures all that different? With no delivery on feeders and very limited delivery on fats these both seem about like going to the casino, yet they often control the lives of hard working producers and their families.

Thank you Derrell, OK State and Drovers

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For anyone not familiar with the Hans Christian Andersen fairy tale