Probe finds no evidence of cattle market manipulation

? An ongoing investigation of false rumors of a foot-and-mouth outbreak in Holton has found no evidence of deliberate manipulations of the futures market, the Commodity Futures Trading Commission said.

Rumors of the outbreak, which circulated on March 13, sent cattle prices plummeting.

The commission’s analysis of cattle futures and options data found that cattle feeders were the largest traders in the days following the scare. Cattle feeders’ market trading during that time was consistent with industry risk management strategies, according to a recently released CFTC report.

The agency also said its surveillance of April live cattle futures contract revealed no evidence of unusual trading activity.

“We were glad to learn it was unlikely that anyone used knowledge of foreign animal disease testing for personal gain at the expense of Kansas beef producers and cattle futures traders,” Lisa Taylor, spokeswoman for the Kansas Department of Agriculture, said Monday.

On March 12, nine cows at the Holton Livestock Market were tested for foot-and-mouth disease. The next day, false rumors of a possible outbreak in Kansas hit the Chicago Mercantile Exchange, where livestock futures contracts are traded.

Analysts estimate the rumor cost the industry as much as $50 million nationwide after prices dropped $1.50 per hundredweight for market cattle on the day of the scare.

CFTC told the National Cattlemen’s Beef Assn. meeting this month that the fall in cattle prices began on March 13.

In its report, CFTC said it is investigating the events surrounding that day as well as the sharp downtrend in prices that has persisted for since then.

“We are using all the tools that are available to ensure the integrity of the market,” Alan Sobba, CFTC director of external affairs, said Monday.