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Live Cattle Futures

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Live Cattle Contract Specs:

  • Ticker Symbol: LC
  • Exchange: CME
  • Trading Hours: 10:05 a.m. to 2:00 PM EST.
  • Contract Size: 40,000 pounds.
  • Contract Months: Feb, Apr, Jun, Aug, Oct, Dec.
  • Price Quote: price per pound. Ex $.8550 per pound or 85 and 1/2 cents
  • Tick Size: 0.00025 = $10.00 (0.00025 x 40,000 lbs).
  • Last Trading Day: The last business day of the contract month.

Live Cattle and Feeder Cattle :

There are two types of cattle traded at the CME: Live cattle and feeder cattle, so we have to diferentiate the two. Live cattle are considered cattle from the calf stage to the point when they reach about 600 to 800, which takes about six to ten months. At this point, they are transfered to feedlots and they will be considered feeder cattle at this point. They remain on the feedlots for about another five months where they will put on about another 500 pounds. Here, they meet their fate and become slaughtered. The average slaughter weight is about 1,250 pounds and a dressed carcass weight is about 750 pounds.

Live Cattle Fundamentals:

The seven major cattle producing states are Arizona, California, Colorado, Iowa, Kansas, Nebraska, and Texas.

Cattle are usually fed corn, milo and even wheat if the price is cheap enough. The protein end of their diet usually comes from soybeans. They are also fed roughage like hay and alfala.

Cattle and Weather:

Weather can also be a factor in cattle prices. Very hot weather can usually results in cattle not gaining normal weight as they tend to eat less. Also, extremely cold weather causes cattle to become stressed and burn more energy to stay warm, wich means less weight gain. Less weight gain equal less meat and lower prices.

Cattle on Feed Report:

The most important report for cattle futures is The Cattle on Feed Report. This report contains the monthly total number of cattle and calves on feed, placements and marketings.

  • Cattle on Feed is simply the amount of cattle placed on feedlot that will eventually be sent to market.
  • Placements are cattle put into a feedlot, fed to produce a grade select or better, and they are intended for the slaughter market.
  • Marketings are cattle shipped out of feedlots to the slaughter market.

Tips on Trading Cattle Futures:

  • Seasonally cattle moves higher from November to January. Prices tend to move lower from February to May.
  • The Cattle on Feed Report is normally a big market mover.
  • Mad cow disease pops up every once in a while. This can cause the market to sell off sharply. It is normally just panic selling, but if legitimate cases are reported, demand and prices can drop quickly.
  • The price of feed - corn, soybeans, wheat, etc. can also impact cattle prices. If the feed is too higher, cattle will normally be sent to market earlier and at lower weights. This tends to lower prices for cattle futures.
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