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CME contracts may see impact from government shutdown

With every minute that goes by of the U.S. government shutdown, the impacts are becoming more widespread. That is the case for Chicago’s CME Group, who announced Tuesday that a prolonged government shutdown could cause a change in the way that Livestock and Dairy contracts are settled.

According to a CME letter to its customers, A prolonged shutdown of the federal government and furloughing of USDA staff could result in interruptions or gaps in reporting key agricultural pricing information from the USDA’s Agricultural Marketing Service (AMS). As a result, we wanted you to be aware that settlement prices for certain CME dairy and livestock contracts, which are cash settled based on USDA data, could be impacted in the event of a prolonged shutdown of the agency and may require the exchange to modify the current settlement procedures of the following products.

Here is a list of CME dairy and livestock contracts that may be impacted:

Dairy – September 2013 Class III Milk, Class IV Milk, Butter, Whey, Cheese and Non-Fat Dry
Milk futures and options

Livestock – October 2013 Lean Hogs, Live Cattle and Feeder Cattle futures and options

CME groups says they will continue to closely monitor this situation and will keep customers apprised of any potential changes to the settlement procedures for CME dairy and livestock contracts.

Current procedures for the settlement of CME dairy and livestock futures can be found in our CME Rulebook at http://www.cmegroup.com/rulebook/CME/

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