We have a couple of crops that we raise that have no futures markets.  They are far and away our most profitable crops, but they have to be marketed differently than corn or wheat.  One of them, confection sunflowers, we don't put a seed in the ground without a price contract.  The other, proso millet, we have to have lots of on farm storage because there is very little price movement until the actual supply dries up and then it shoots up.  Both of them are very profitable but they have to be marketed differently.  A cattle market without the futures market would work just fine, it just wouldn't work the way it does now.  Keep in mind, the cattle futures contract is a relatively young thing.

I am one of those evil cow-calf guys and I would be quite happy to see the futures markets go away.  I have never been convinced that they were necessary.  If they were actually limited to the real producers or end users that would be a much different story, but when we have people buying and selling paper with no real commodities to back them and no real involvement to give them legitimacy our markets become wildly distorted.  If you want to keep the futures market fine, but figure out a way to limit it to actual players and put an end to this manipulation so that the traders and funds can no longer swing the markets every day and skim their profits.  They all go home to their homes at the end of the day without any real concern with the guy that has manure on his boots trying to figure out how he is going to pay the bills this year after watching his cattle lose $2-3 a day for no reason other than the clowns in Chicago want it to move.  The Mob runs a protection racket also, but that doesn't mean that business wouldn't get done without them.  The futures market, to any degree that they actually did serve as a tool of price discovery and risk mitigation, no longer serve that function.  Barring BSE cases or foot and mouth disease outbreaks there is no reason for cattle to have limit moves, production numbers don't change that rapidly.  Yet we have seen them repeatedly over the last while.  Why?  Because the traders and funds needed them to, not because the packers or ranchers or feeders needed it.