What are live cattle futures?
Live cattle futures are standardized, exchange-traded contracts on the Chicago Mercantile Exchange (CME). The contracts represent the delivery of full-grown cattle that are ready to be sold to meat processors, having reached a weight of between around 1,200 and 1,400 pounds. The introduction of live cattle futures in 1964 was an innovative move because futures were only traded on storable commodities such as grain at the time. Since then, the live cattle futures contract has undergone significant changes, and each of these changes has enhanced the usefulness of the contract in risk management programs. These tools have enabled cattle producers to manage their price risk more effectively.
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How to trade live cattle futures
Live cattle futures contracts represent 40,000 pounds of market ready cattle and are traded electronically on the Globex platform Monday 9:30 a.m. ET to 2:05 p.m. ET. An account approved to trade futures is required in order to trade live cattle futures.
Live cattle futures contract specifications
Considering trading live cattle futures? Here are the live cattle futures contract specifications.
|Exchange||Chicago Mercantile Exchange, LC|
|Contract Size||40,000 pounds|
|Minimum Tick Size and Value||$0.025/cwt (0.025 cents per pound), worth $10.00 per contract.|
|Trading Times||Live cattle futures trade electronically on the Globex® trading platform Monday 9:30 a.m. U.S. ET to 2:05 p.m. U.S. ET.|
|Principal Trading Months||Principal trading months for live cattle futures include February, April, June, August, October, and December.|
At Schwab, you also get access to advanced trading platforms and education, where you can take advantage of market research, real-time live cattle futures quotes, and other specialized tools.
Why trade live cattle?
Investors can use agricultural products like live cattle futures to hedge or diversify their portfolio using investments that have a low correlation with their financial assets.
Traders can use live cattle futures to speculate on the price of market-ready cattle, which can be affected by a number of factors including overall demand for animal protein which is closely tied to consumer incomes, the change in price of commodities used to feed the animals like corn and soybeans, changing trends in consumer diets, and even the strength of the U.S. dollar.
It is important to understand the benefits and risks involved with live cattle futures before placing a futures trade. Compared to traditional investments, with live cattle futures you can trade outside of the traditional market hours associated with equities and take advantage of trading opportunities regardless of market direction. Live cattle futures also provide the ability to trade with greater leverage and allow a more efficient use of trading capital. However, trading leveraged products like live cattle futures also involves the risk that losses can exceed the amount originally invested and may not be suitable for all investors.
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