The world cattle population is well over 1 billion head, and in many cultures, such as in parts of Africa, having many cattle is a good signal of wealth. In order to be transferred to the feedlot and fattened for slaughter, feeder cattle must be between 1-2 years of age. The steer and cows that are chosen to become feeder cattle have usually been culled from a main herd because they are superfluous to breeding needs.
|Feeder Cattle Futures Contract Specifications|
|Contract Size||50,000 pounds (˜23 metric tons)|
|Price Quotation||Cents per pound|
|Trading Hours||Monday 9:05 a.m. Central Time/CT-Opening. At 4:00 p.m. CT on Monday- Thursday, the markets halt and restart at 8:00 a.m. CT on the next morning. Friday 1:55 p.m. CT-Close|
|Minimum Price Fluctuation||$.00025 per pound ($12.50 per contract)|
|Product Code||CME Globex: GF|
|CME ClearPort: 62|
|Listed Contracts||January (F), March (H), April (J), May (K), August (Q), September (U), October (V) & November (X)|
|Settlement Method||Financially Settled|
|Last Trade Date||Last Thursday of the contract month with exceptions for November and other months, 12:00 p.m.|
|Trade At Marker Or Trade At Settlement Rules||(TAS) Trading at settlement is available for first 2 listed futures contract months, a calendar spread between the first and second contract month, and are subject to the existing TAS rules. The Last Trade Date for CME Livestock TAS products will be the second to last business day in the month prior to the named contract month.
Trading in all CME Livestock TAS products will be 9:05-13:00 Chicago time on Mondays or on the Tuesdays that follow a Monday holiday, and Tuesday through Friday 8:00-13:00, Chicago time.
TAS products will trade a total of four ticks above and below the settlement price in ticks of the corresponding futures contract (0.00025), off of a “Base Price” of 0 to create a differential (plus or minus 4 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a “traditional” TAS trade which will clear exactly at the final settlement price of the day.
|Settlement Procedures||Livestock Futures Settlement Procedures|
|Exchange Rules||These contracts are listed with, and subject to, the rules and regulations of CME.|
|Source: CME Group|
Feeder Cattle Facts
Most feeder cattle are bred in the summer to ensure that their calves are born in the spring season because of both the temped climate and the abundance of pasture to feed on. Around 8 months of age, cattle are weaned from their mothers and sent to stocker operations in order to encourage growth to a substantial size (600-800 lbs.). After reaching this weight, feeder cattle are then sent to a feed lot where they are fed a certain diet to inhibit a quick weight gain. When feeder cattle mature to 1,200 lbs., they are sold to meat packers to be butchered. The U.S. exports over 2 billion pounds of beef every year.
Feeder cattle futures allow traders to be a part of an all-encompassing market that includes price demand for feed grain and the cattle themselves. It can also allow traders to address price risk among those involved in the trade of feeder cattle and to assess supply and demand of cattle, feed, and for both the current and future outlook.
Last updated October 2015
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