Cattle Futures

By Bhaskar C on February 19, 2010 7:37 PM



Cattle Futures

As part of my commodity articles, the third commodity that I will be covering on my block is the livestock cattle. My first 2 commodity articles were on Natural Gas and Copper. Articles I wrote for Natural Gas included Natural Gas Futures and Natural Gas Prices. For Copper, I wrote 2 articles as well, Copper Prices and Copper Consumption. In the article Natural Gas Futures, I talked about Natural Gas as a product and futures product available for trade, while article Copper Consumption discussed demand of Copper within US and the rest of the world.

For those who are interested in trading cattle, some of the futures that you can trade are Feeder Cattle and Live Cattle. Feeder Cattle are calves that have weaned away to be sent to feedlots, while live cattle are cattle that have attained a certain weight before they are sent to packers. I am not going to discuss what packers do, but lets just say that the final product ends up in your restaurant and grocery stores. Both of these futures products are available for investors to trade on Chicago Mercantile Exchange (CME).

Live Cattle Futures

The Live Cattle futures product has a contract size of 40,000 pounds or 18 Metric tons. So, if you buy 1 Live Cattle Futures Contract, you own 40,000 pounds of live cattle.The contract has a Tick Size of $.00025 per pound - .00025 * 40,000 pounds = $10 per contract.


Feeder Cattle Futures

Live Cattle futures had a contract size of 40,000 pounds, Feeder Cattle futures product on the other hand have a contract size of 50,000 pounds or 23 Metric tons, and also priced at cents per pound, and the same Tick Size as the Live Cattle futures product. Since the feeder cattle futures product has 50,000 pounds in its contract instead of 40,000 pounds, a rise of .00001 in price per pound would translate to a rise of $.50 per contract.

Besides the 3 above written commodity articles, I have also written 2 articles on futures product based on indices. The futures product I have written based on Indices are Dow Futures and S&P Futures. In a follow up article, I will discuss prices trend of cattle futures products.