Live Cattle Commodity Trading
Live cattle commodity trading has been lucrative this last year in a bull market. Fundamental analysis of factors that influence the price of live cattle including the cost of feed, herd sizes, and weather is useful in live cattle commodity trading. So is technical analysis of the live cattle commodity market. Commodity and futures training will help you understand commodity prices and commodity futures in trading live cattle. Live cattle are cows from calf stage up to 600 to 800 pounds when they go to a feed lot to put on another 500 pounds or so and are called feeder cattle. Successful commodity investing in live cattle starts with a few basics.
Live cattle trade on the Chicago Mercantile Exchange as LC. Live cattle commodity trading is in lots of 40,000 pounds which translates to about 80 cattle. Prices are quoted per pound in increments (ticks) of $0.00025. Thus one tick comes to $10 (40,000 X $0.00025). As of this writing live cattle futures are trading at $95.075 for April settlement and as low as $90.425 for August settlement. These figures translate to around $3.8 million for a lot with movement of a dollar in price coming to $40,000 in profit or loss in trading commodities in live cattle. Technical analysis charts used in commodity trading are just as useful for live cattle futures as they are for stock trading, options trading or Forex trading. As in using Candlestick charting the use of technical indicators to evaluate market history tells traders what the market will do next.
The commodity market in live cattle derives information from a number of sources. Feed prices are critical to success in livestock management and to making a profit raising beef. When the price of grain/feed goes up ranchers often will cull their herds. This reduces their costs and reduces the supply of beef in the year to come for live cattle and in the months to come in case of feeder cattle. However, culling herds means slaughtering many animals and this brings a lot of beef to market all at once. This makes steak cheaper in the market and reduces the commodity price for feeder cattle and live cattle in the short term. When the winter weather on the Great Plains and Corn Belt is severe livestock numbers may not drop but the cold stress will slow weigh gain of animals, reduce profits for ranchers, and delay the amount of beef that will come to market. Successful commodity trading requires that you understand how ranchers operate and how herd size and temporary swings in beef supply will affect live cattle commodity trading.