Ticker symbol: LE (pit trading), LC (electronic trading).Boxed beef cutouts are the major cuts that are often deboned and are packed and sealed in cardboard boxes. While slaughtered cattle have value from their hide and other parts, the majority of the price comes from boxed beef cutouts. The average slaughter weight is about 1,250 lbs. Feed lots go on to sell the live cattle to meat packers that slaughter the cattle. Traditionally, live cattle remain on the feedlot for up to 5 months (after being moved from feeder) while they put on an additional 500 lbs. The term live cattle refers to cattle that have reached the necessary weight for slaughter. Live cattle are traditionally raised in the Midwest, Southwest, and California (in the US). Live cattle futures began trading in 1964 at the Chicago Mercantile Exchange (CME) as the first non-storable futures contract. For example, if feeder cattle are trading at a price of 1.46550, the total value of the contract is $73,275.00 (50,000 x 1.46550). * To arrive at the value of the contract, simply multiply the price of feeder cattle times the size of the contract. Months traded: Jan, Mar, Apr, May, Apr, Aug, Sep, Oct, and Nov.* Feeder cattle futures are cash settled, so there is no delivery unlike the live cattle futures. Minimum tick: $0.00025 cents per pound (or $12.50 per tick).Symbol: FE (open outcry), FC (electronic trading).Corn is the best way to quickly fatten feeder cattle therefore, the price of corn has a direct effect on the price of feeder cattle. Once again, the feeder cattle put on weight aggressively in the feed lots to reach the desired finish weight of 1,000-1,300 lbs. The process of transforming feeder cattle to live cattle usually takes between 3 to 4 months. Traditionally, feeder cattle must be mature enough in order to go to the feedlot and be fattened prior to slaughter. Feeder Cattleįeeder cattle are weaned calves that have been raised to be 600-800 lbs.Once a calf reaches a minimum weight, it is sent to a feedlot with the goal of putting on weight aggressively. Before a calf is considered a feeder, it has already been gone through the process of being born, weaned and sent out to graze for up to nine months. On average, a newborn calf will weigh 70 to 90 pounds at birth.
Ranchers will traditionally breed their cattle in the summer which will produce calves in the spring. Below, I will discuss the timeline of the cattle’s life cycle along with the features of each futures contract and the factors that affect these contracts. While feeder and live cattle are related contracts, each has its own characteristics that affect supply and demand. There are two types of cattle futures to trade when addressing beef futures: feeder cattle and live cattle.
Whether one is a rancher needing risk management tools or a speculator seeking trading opportunities, cattle futures provide the liquidity and transparency necessary for market activity.īefore taking advantage of these tools, one must understand the fundamentals of the market. Live cattle prices have been rallying to all time high prices, presenting numerous trading opportunities. The U.S is the largest producer of grain fed beef in the world due to its abundance of pasture suitable for grazing and its large supply of feed grains.
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