R-CALF USA has requested the Department of Justice and the Department of Agriculture's Grain Inspection, Packers and Stockyards Administration to immediately initiate a Packers and Stockyards Act enforcement action against beef packer JBS. According to R-CALF USA, on the last trading day of October 2009, the cattle futures market fell the limit at a time when there were no underlying market forces that would warrant this break in the market. According to R-CALF USA, this suggests that a dominant market participant had shorted the market.
Just days ago the CFTC ordered a trader – Newedge – to pay a penalty of over $220,000 for unlawful activities that occurred in October 2009, an action in part pursuant to the new Wall Street Reform Act. The CFTC found that in October 2009, Newedge exceeded the contract speculative limit for trading cattle by over 4,000 contracts, which it had purchased from JBS. Then, Newedge sold JBS an over-the-counter swap in live cattle.
R-CALF USA CEO Bill Bullard believes the October 2009 live cattle futures market transaction that involved both Newedge and JBS, and in which Newedge was known to have engaged in unlawful activity, was a significant, contributing cause for the manipulation of cattle prices and resulting harm to U.S. cattle producers.