June 2, 2000

E-mini feeder cattle, hog contracts offered
A new e-mini feeder cattle contract will be offered by the Chicago Mercantile Exchange.

The contract will be based on a 10,000-pound contract, compared to 50,000 pounds for the full contract. Trading in these contracts will begin sometime in August.

The contracts will not be traded via open outcry as the full contract is currently traded. Rather, it will only be traded electronically via Globex.

The contracts will trade the same hours as the full contract and the same daily price limits ($1.50 per hundred per day). Options on these contracts will be announced at a later date.

E-mini contracts can be bundled with the full contract. In other words, if you sell five e-mini feeder cattle contracts, you can offset them by buying one full feeder contract.

The Exchange will also offer new e-mini hogs futures and options on futures contracts. These contracts will be based upon a 10,000 pound contract, compared to a full contract, which is 40,000 pounds.
Source: AFBF Speedline, May 22, 2000

Limits expanded on grain futures contracts
The Chicago Board of Trade recently proposed that limits on grain futures contracts traded on their Exchange be expanded. The decision by the board of directors of the Board of Trade would increase the daily price limits as follows: corn, from 12 to 20 cents; wheat, from 20 to 30 cents; oats, from 10 to 20 cents; rough rice, from 30 cents/cwt. to 50 cents/cwt.; soybeans, from 30 cents to 50 cents; soybean meal, from $10 to $20 per ton; soybean oil, from 1 cent to 2 cents per unit of trading.

The proposal goes to the Commodity Futures Trading Commission (CFTC) for their approval.
Source: AFBF Speedline, May 22, 2000

Off-farm income helps keep on-farm income up
Many farmers, particularly small operators, depend more on off-farm income for total household income. On average, 88 percent of total farm operator household income in 1998 came from off-farm sources.

Even for large family farms (total sales $250,000 to $500,000), a substantial portion of total household income in 1998—44 percent—came from off-farm sources. These large family farms had average household income exceeding twice the average for all U.S. households in 1998, with a very large contribution to total income coming from off-farm wages.

For the majority of family farms, stability in off-farm income is at least as important to creditworthiness and overall financial health as stability in farm income.
Source: Agricultural Outlook, May 2000 Economic Research Service, USDA

Farm debt stable, interest rate up
Farm debt at the end of 2000 is forecast at $173 billion, essentially unchanged from 1999. At the end of 1999, commercial banks accounted for 40 percent of all farm debt outstanding, making them the leading agricultural lenders. The Farm Credit System (FCS), holds 27 percent of all farm debt. Farmers obtain 22 percent of their credit needs from merchants, dealers and individuals. The Farm Service Agency (FSA) holds about 5 percent and life insurance companies 6 percent.
Source: Agricultural Outlook, May 2000 USDA/Economic Research Service