CME Group Feeder Cattle: A Comprehensive Guide

Introduction

CME Group feeder cattle futures are contracts that allow traders to buy or sell live cattle that are intended to be fed for slaughter. These contracts are traded on the Chicago Mercantile Exchange (CME) and are one of the most important benchmarks for the cattle industry.

Types of CME Group Feeder Cattle Contracts

There are two main types of CME Group feeder cattle contracts:

• Live Cattle Futures: These contracts are for the delivery of live cattle at a specified time and location.
• Feeder Cattle Futures: These contracts are for the delivery of feeder cattle, which are younger animals that are intended to be fed for slaughter.

Key Features of Feeder Cattle Futures

• Contract Size: Feeder cattle futures contracts are for the delivery of 50,000 pounds of live cattle.
• Trading Months: Feeder cattle futures are traded for the current month and the next 11 months.
• Tick Size: The minimum price change for feeder cattle futures is $0.0025 per pound.
• Trading Hours: Feeder cattle futures are traded from 8:30 AM to 1:15 PM CT, Monday through Friday.

CME Group Feeder Cattle Index

The CME Group Feeder Cattle Index is a calculated index that reflects the average price of feeder cattle in the United States. The index is based on the prices of live cattle futures and feeder cattle futures traded on the CME.

Factors That Affect Feeder Cattle Prices

The prices of feeder cattle are affected by a number of factors, including:

• Cattle Supplies: The number of cattle available for slaughter is a major factor that affects feeder cattle prices. When cattle supplies are high, feeder cattle prices tend to be lower.
• Feeder Cattle Demand: The demand for feeder cattle is also a major factor that affects prices. When demand for feeder cattle is high, prices tend to be higher.
• Corn Prices: Corn is a major feedstuff for cattle. When corn prices are high, feeder cattle prices tend to be higher.
• Beef Prices: The prices of beef also affect feeder cattle prices. When beef prices are high, feeder cattle prices tend to be higher.

Using CME Group Feeder Cattle Futures

CME Group feeder cattle futures can be used for a variety of purposes, including:

• Hedging: Cattle producers can use feeder cattle futures to hedge against the risk of price changes.
• Speculation: Traders can use feeder cattle futures to speculate on the future prices of feeder cattle.
• Investment: Feeder cattle futures can also be used as an investment.

Conclusion

CME Group feeder cattle futures are an important tool for the cattle industry. These contracts provide a way to manage risk, speculate on future prices, and invest in the cattle market.