Feeder Cattle Futures

Feeder Cattle Futures Market

Feeder cattle are a popularly traded futures commodity which refers to cattle that have been raised to 600-800 pounds and are sent to feedlots in order to gain enough weight to be ready for slaughter (1000-1300 pounds) at which point they become live cattle. This process takes roughly 3-4 months.

Feeder Cattle Futures History

Cattle have been domesticated for the last 10,000 years, however, it wasn’t until the 1800’s that beef started to take off in northern markets. The introduction of the refrigerated rail car in the 1860’s opened up the beef industry by allowing farmers to transport beef across the country. Beef saw another spike in the 1950’s with the introduction of the federal highway system. Feeder cattle were first added to the CME as a livestock product in 1971.

Feeder Cattle Facts

The U.S. accounts for 47% of worldwide beef production, making it the largest producer of beef in the world. However, the U.S. is also one of the largest importers of beef. As of August 23rd, 2018 the U.S. has imported 1.53 billion pounds of beef in 2018, up 1% from 2017. The amount of beef imported by the US can affect the price and quantities of domestic cattle purchased.

Trading Feeder Cattle Futures

  • Feeder Cattle Futures are traded on the CME and through the CME’s Globex electronic platform
  • Feeder Cattle futures are traded every year in Jan, Mar, May, Apr, Sep, Nov. Which are all months in which live cattle is not traded.
  • In feeder trading, a 1 cent move is equal to $500.
  • Similar to live cattle, bovine spongiform encephalopathy (mad cow disease) can impact feeder cattle prices. Outbreaks have led to bans in some countries which has resulted in the destruction of livestock in order to reduce the risk of the disease spreading.
  • Feed prices such as hay and corn can directly affect the feeder cattle market. When feed prices rise, cattle are often sold at lower weights which results in a drop in price.
  • Weather can also affect the market. For example, high temperatures decrease a cattle’s appetite which reduces the amount of weight they gain.

 

Feeder Cattle Futures Prices & Contract Specs

Contract SymbolContract UnitPrice Quotation
GF50,000 lbscents per pound
Trading ExchangeTrading HoursTick Value
CME GLOBEX

8:30 - 13:05

$.00025 = $10

 

Free Fundamentals of Trading Agricultural & Livestock Futures

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