Live Cattle Futures

Market

Live cattle futures are widely-traded commodities futures contracts, referring to cattle (cows) that have reached the requisite weight for slaughter, or about 600 to 800 pounds, which takes about six to ten months. At this point, they are transferred to feedlots and they will be considered feeder cattle, traded as feeder cattle futures.

History

Live cattle futures began trading in 1964 on the Chicago Mercantile Exchange (CME) as a non-storable commodity futures product.

Facts

The United States, Brazil and China are the world’s largest consumers of beef, according to the United Stated Department of Agriculture. It is estimated that a person eats an average of 67 pounds of meat and drink approximately 100 quarts of milk per year. This directly affects the prices of live cattle futures prices. In addition, the seasonal aspects of meat production, cyclical aspects of the cattle industry and consumer's desire for meat products make the contract attractive to commodities futures traders.

Trading

  • In addition to the CME, live cattle futures trade through the CME’s Globex electronic platform and the Brazilian Mercantile and Futures Exchange (BMF).
  • Live cattle futures are delivered every year in February, April, June, August, October and December.
  • In a live cattle contract, a 1-cent move is equal to $4. When determining CME's live cattle profit and loss figures, the difference is calculated between the contract price and the exit price, the result is then multiplied by $4.00.
  • Bovine spongiform encephalopathy (BSE), also known as mad cow disease, can impact live cattle futures prices. Outbreaks have led countries to ban imports and exports from various countries around the world and have resulted in the destruction of thousands of livestock in order to reduce the potential spread of the disease.
  • Live cattle futures prices typically raise ahead of prime grilling season, which begins on the U.S. Memorial Day holiday and lasts through the warmer seasons across the nation.
  • The price of commodities futures on the grain complex – typically futures such as corn, soybeans and wheat - can also impact live cattle futures prices. If the feed prices are too high, cattle will normally be sent to market earlier and at lower weights. This tends to lower prices for cattle futures.
  • The USDA’s monthly Cattle on Feed Report can have a significant impact on live cattle futures prices.

 

Contract Specifications

Contract SymbolContract UnitPrice Quotation
GLE40,000 lbscents per pound
Trading ExchangeTrading HoursTick Value
CME GLOBEX

9:15 - 13:00, 
8:00 - 16:00

1/4 cent = $10

 

 

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.