CME Group Launches Boxed Beef Index

The CME Group has begun publishing a Boxed Beef Index, a new pricing tool that tracks daily value further down the supply chain, focusing on the prices paid for Choice and Select cuts of beef.

“This will provide market participants with price discovery across the entire supply chain and is the latest innovative tool designed to help all our customers manage their risk,” said Dana Schmidt, director of corporate communications for CME Group.

The CME Boxed Beef Index is a five-business day, volume-weighted measurement of the daily Choice and Select Cutout prices. The data is collected by the USDA and published in its “National Daily Boxed Beef Cutout and Boxed Beef Cuts – Negotiated Sales – Afternoon” (LM_XB403) report.

The index calculation begins by multiplying the daily number of loads by the corresponding daily cutout price for both Choice and Select and adding them to get the total daily value, according to the CME Group. Those results are then added to the four previous consecutive daily values to determine the five-day total value. The daily loads of Choice and Select are summed to determine the total daily load count. The most recent total daily load count is added to the four previous consecutive daily load counts to determine the five-day total load count. 

To determine the CME Boxed Beef Index value, divide the five-day total value by the five-day total load count. The result is a five business day weighted average price of beef carcass values in dollars per hundredweight ($/cwt).

  • The Boxed Beef Index will provide a transparent daily price that producers, packers, processors, wholesalers and others can use to track and forecast beef prices. 
  • Customers can compare the daily Boxed Beef Index pricing data to the USDA-reported prices of negotiated fed cattle, or the negotiated prices between the packer and feeder for the animals, to better manage their risk. 
  • Customers could also compare the Boxed Beef Index to the Pork Cutout Index to gain insight into consumer demand.
  • Ultimately, CME Group believes the Boxed Beef Index can become the benchmark price reference for beef.

Schmidt said the Boxed Beef Index is a free pricing tool for market participants, not a tradeable product.  “It is intended to be a monitoring tool to help users make informed risk management decisions.”

 

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