|Tick Size||0.00025 per pound ($10.00 per contract)|
|Daily Limit||6.75 cents per pound ($2,700 per contract) Expanded limit 10 cents|
|Contract Size||40,000 pounds|
|Months||Feb, Apr, Jun, Aug, Oct, Dec (G, J, M, Q, V, Z)|
|Trading Hours||8:30a.m. - 1:05p.m. (Settles 1:00p.m.) CST|
|Value of One Futures Unit||$400|
|Value of One Options Unit||$400|
|Last Trading Day||The last business day of the contract month|
The beef cycle begins with the cow-calf operation, which breeds the new calves. Most ranchers breed their herds of cows in summer, thus producing a new crop of calves in spring (the gestation period is about nine months). This allows the calves to be born during the milder weather of spring and provides the calves with ample forage through the summer and early autumn. The calves are weaned from the mother after 6-8 months, and most are then moved into the "stocker" operation. The calves usually spend 6-10 months in the stocker operation, growing to near full-sized by foraging for summer grass or winter wheat. When the cattle reach 600-800 pounds, they are typically sent to a feedlot and become "feeder cattle." In the feedlot, the cattle are fed with a special food mix to encourage rapid weight gain. The mix includes grain (corn, milo, or wheat), a protein supplement (soybean, cottonseed, or linseed meal), and roughage (alfalfa, silage, prairie hay, or an agricultural by-product such as sugar beet pulp). The animal is considered "finished" when it reaches full weight and is ready for slaughter, typically at around 1,200 pounds, which produces a dressed carcass of around 745 pounds. After reaching full weight, the cattle are sold for slaughter to a meatpacking plant. Futures and options on live cattle and feeder cattle are traded at the CME Group. Both the live and feeder cattle futures contracts trade in terms of cents per pound.
Prices - CME live cattle futures prices (Barchart.com symbol LE) started 2022 strong and climbed to a 7-year high in April of $1.4423 a pound. Tighter cattle supplies pushed prices higher in early 2022. Abnormally dry conditions in the northern U.S. plains in 2021 squeezed supplies of hay and feed for cattle, prompting some ranchers to slaughter cattle usually held for breeding. The USDA's biannual cattle inventory report in January showed the U.S. cattle herd dropped to 91.9 million head, the smallest herd since 2016. Cattle prices then sold off through May to a 1-year low of $1.323 a pound as soaring beef prices undercut consumer demand, with ground beef prices surging to a record high of $4.19 a pound in April. Sinking demand pushed beef supplies in U.S. cold storage up to 520 million pounds in May, an all-time high for the month of May. However, cattle prices then trended higher the remainder of the year and posted a 7-1/2 year high of $1.5893 a pound in December. Extreme weather in the U.S. Plains in mid-2022 killed thousands of cattle. That also led to lighter cattle weights and smaller beef supplies as the average cattle slaughter weight fell to a 3-year low in late June. A plunge in beef packer profit margins to record lows prompted cattle ranchers to send fewer cattle to slaughter as October cattle-on-feed placements tumbled -6.1% yr/yr to 2.108 million head, the lowest in 10 years. Cattle prices finished 2022 up +13.7% yr/yr at $1.5790 per pound.
Supply - The number of world cattle as of January 1, 2023, rose by +0.1% to 941.1 million head. As of January 1, 2023, the number of cattle on farms in India (the world's largest herd) rose by +0.3% to 307.550 million head, and on Brazilian farms (the world's second-largest herd) rose by +0.3% to 194.365 million head. As of January 1, 2022, the number of cattle and calves on U.S. farms fell by -2.0% yr/yr to 91.902 million head. The USDA reported that U.S. commercial production of beef in 2022 rose by +1.7% yr/yr to 28.417 billion pounds.
Demand - The federally-inspected slaughter of cattle in the U.S., a measure of cattle consumption, rose by +1.4% yr/yr to 33.664 million head in 2022, well above the 5-decade low of 28.296 million head in 2015.
Trade - U.S. imports of live cattle in 2022 fell by -11.1% yr/yr to 1.578 million head. U.S. imports of beef in 2022 rose by +0.9% to 3.350 billion pounds. U.S. exports of beef in 2022 rose by +3.5% yr/yr to a record 3.090 billion pounds.
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