Live cattle futures historical price charts tells us about the past prosperity of a nation. Of all foods known around the planet, consumption of beef is probably the one most associated with a nation’s prosperity and improved standard of living.
As a result, live cattle futures are a crucial market for industrialized nations, as the size and health of cattle herds is inextricably linked to other food commodities, such as soybeans and corn, which are used for feed stock.
Beef exports have become an important market for US ranchers, with South Korea, China and Japan among our chief customers.
Live Cattle Futures Contract Specification
Live Cattle Futures contracts trade on the Chicago Mercantile Exchange (CME) under the ticker,”LC”. Daily trading is only for four hours daily, from 10:00am – 2:00pm EST. The last trading day is also the last business day of a delivery month. Contract delivery months are: February, April, June, August, October, and December.
A single contract size averages 40,000 pounds. (A live cattle usually is a description for cattle from the calf stage up until about 800 pounds. At that point, they are re-designated as feeder cattle, which trade separately on the CME, and are fattened for slaughter at a weight that is usually 1,200 – 1,300 pounds). Price quotes are per pound, and a tick equates to 0.00025 = $10.00 (0.00025 x 40,000 lbs).
Factors Influencing Live Cattle Futures Historical Price Charts
As live cattle prices are based on weight, the number of cattle that can attain qualifying weights to become feeder cattle is major factor in anticipating futures contract price increases or drops. Influencing those weights are the amount of feed prices (i.e., corn, soybeans, wheat, et al.) and weather conditions.
US cattle are raised primarily in Texas, Nebraska, Kansas, Iowa, Colorado, California, and Arizona. In hot weather regions, like Texas and Arizona, cattle may eat less during heat waves resulting in less weight gain. Cold weather spells may cause them to burn more energy to keep warm, also resulting in reduced weight.
In addition, fears of Mad Cow Disease outbreaks, Salmonella or e.coli contamination can result in price fluctuations on regional supplies.
Monthly Cattle Of Feed Report
Speculators and traders in live cattle futures studiously follow two US Department of Agriculture reports: The Cattle on Feed Report (published monthly) is considered the most critical , and tallies the number of live cattle that elevate to feeder cattle status each month.
The Cattle Inventory Report (published in January and July) surveys the total number of cattle in the USA, inclusive of dairy cows and other cattle not necessarily earmarked for slaughter. Traders may also glean trends from researching regional live cattle auction reports, slaughterhouse and meat storage statistics.
Monitor Brazil News
Although beef consumption is synonymous with American diets, Brazil actually has the largest cattle population where there is also beef consumption (Brazil, at over 180 million heads, is almost double that of the USA’s 96 million), with China second at 139 million,, and the United States third.
India has the largest cow population (280 million), but the Hindu religion protects them from slaughter, which allows them to roam free to multiply without any human involvement in breeding, etc.
Seasonal Trends Shown In Live Cattle Futures Historical Price Charts
There are both short and long term trend cycles for historical live cattle prices. Seasonally, they tend to move higher from November to January and lower from February to May in line with shifts in beef supplies and consumer demand. On a longer term basis, which ranchers have been aware of since the 1860’s and which has been documented since live cattle futures began trading on the CME in 1964, there is a 10 to 12 year cycle.
Beef production peaks and prices decrease as supplies increase typically near the middle of each decade. The lower prices result in losses to cattle producers who, predictably, cut production. The live cattle cycle is completed with massive spikes in live cattle prices, rewarding the cattle producers with great profits. Live cattle futures historical price charts shows that the cycle is repeated, starting with more production of beef.