Until they reach a specific weight (typically 600-800 lbs), live cattle are specially raised for beef production. This process begins when they are calves and ends when they reach the required weight; after this, they are then transferred to feedlots and considered "feeder cattle". Contracts for live cattle in the CME are for 18 metric tons.
|Live Cattle Futures Contract Specifications|
|Contract Size||40,000 pounds (~18 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 ($10 per contract)|
|Product Code||CME Globex: LE|
|CME ClearPort: 48|
|Listed Contracts||February (G), April (J), June (M), August (Q), October (V) & December (Z)|
|Last Trade Date||Last business day of the contract month, 12:00 p.m.|
|Trade At Marker Or Trade At Settlement Rules||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|
Live Cattle Facts
Most 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 feed lots in order to encourage growth to full size (600-800 lbs.). At the feed lots, live cattle are fed a certain diet in order to inhibit weight gain. When the cattle reach an approximate weight of 1,200 lbs., they are considered to be suitable for slaughter and are sold to meat packers. The Unites States exports over 2 billion pounds of beef very year.
Live cattle futures and options are traded in cents per pound on the Chicago Mercantile Exchange. Live cattle futures can allow traders to address price risk among those involved in the trade of live cattle and to assess supply and demand of cattle for both the current and future outlook.
Last updated October 2015
Recent Posts on Live Cattle
- Trade Spotlight: Futures – Weekly Summary: Cattle, Soybean Oil (7/26/2020) - Stopped out of the Live Cattle contract for a profit. Entered into a short Soybean Oil contract.
- Trade Spotlight: Futures – Weekly Summary: Cattle, OJ (7/19/2020) - Still long the Live Cattle contract. Adjusted the stop loss several times to lock in profit. Stopped in and out of the Orange Juice contract for a loss.
- Trade Spotlight: Futures – Weekly Summary: Cattle (7/5/2020) - Went long the Live Cattle futures market on a breakout.