LIVESTOCK FUTURES (CATTLE, HOGS)
Plain English
Live cattle and lean hog futures let you trade the price of beef and pork. These markets are driven by feed costs (corn and soybean meal), seasonal demand patterns, disease outbreaks, and supply cycle factors. They're less liquid than grains but offer unique trading opportunities.
Going deeper
Live Cattle (LE): 40,000 pounds, tick = $0.00025/lb = $10. Feeder Cattle (GF): 50,000 pounds, tick = $0.00025/lb = $12.50. Lean Hogs (HE): 40,000 pounds, tick = $0.00025/lb = $10. Key drivers: Feed costs (corn and soybean meal prices directly impact cattle and hog profitability), Seasonal demand (grilling season = strong summer beef demand), Disease outbreaks (African Swine Fever devastated China's hog herd in 2019), Cattle Inventory Reports (USDA releases twice yearly), Packer margins, and Export demand. The Cattle Feeder Crush spread (relationship between feeder cattle, corn, and live cattle) is an important spread trade. Unlike financial futures, these physically settle.
Examples
Seasonal Pattern
Beef demand rises before summer grilling season. Live cattle futures historically rally from January through April as packers increase purchases ahead of summer demand. Traders anticipate this seasonal pattern and position in November-December.
Feed Cost Impact
Corn prices spike due to drought. Feed costs for cattle operations skyrocket. Ranchers begin liquidating herds (short-term supply glut — prices drop). But in 6-12 months, fewer cattle in the pipeline means tighter supply and higher prices (long-term bullish).