Live Cattle Oct '24 (LEV24)
| Barchart Symbol | LE |
| Exchange Symbol | LE |
| Contract | Live Cattle |
| Exchange | CME |
| Tick Size | 0.00025 per pound ($10.00 per contract) |
| Margin/Maintenance | $2,695/2,450 |
| Daily Limit | 7.50 cents per pound ($3,000 per contract) Expanded limit 11.25 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 |
Description
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) in early 2023 extended the 4-year rally that began in 2020. A shrinking US cattle herd underpinned live cattle prices as the USDA's biannual cattle inventory report, released in January 2023, showed the US cattle herd dropped to 89.27 million head, the smallest herd since 2014. Years-long drought in the US Plains withered pastures and reduced supplies of feeds, including hay and corn, forcing ranchers to liquidate herds to cut costs. In addition, beef cows, developed for breeding to raise calves, fell to the lowest number since 1962. Cattle prices continued higher into Q3 of 2023 and posted a record high of $1.875 a pound in September as the smaller US breeding herd kept cattle supplies tight. The shrinking US cattle herd reduced cattle slaughter rates and cut into beef supplies as US beef supplies in cold storage fell to an 8-year low in August of 395.4 million pounds. Cattle prices fell back from record highs into the year-end as higher cash cattle prices curbed cattle demand from beef processors. Also, an improvement in beef packer profit margins prompted cattle ranchers to send more cattle to slaughter as September cattle-on-feed placements rose +6.1% yr/yr to 2.206 million head, the most in 2 years. In addition, the number of cattle on feed increased, with cattle on feed in November climbing to a 1-1/2 year high of 11.943 million head. Cattle prices finished 2023 up +6.7% yr/yr at $1.6850 per pound.
Supply - The number of world cattle as of January 1, 2024, remained unchanged at 943.9 million head. As of January 1, 2024, the number of cattle on farms in India (the world's largest herd) rose by +0.1% to 307.635 million head, and on Brazilian farms (the world's second-largest herd) fell by -0.2% to 193.900 million head. As of January 1, 2024, the number of cattle and calves on US farms fell by -1.9% yr/yr to 87.157 million head. The USDA reported that US commercial production of beef in 2023 fell by -4.2% yr/yr to 25.810 billion pounds.
Demand - The federally-inspected slaughter of cattle in the US, a measure of cattle consumption, fell by -4.3% yr/yr to 32.232 million head in 2023, well above the 5-decade low of 28.296 million head in 2015.
Trade - US imports of live cattle in 2023 rose by +24.7% yr/yr to 2.030 million head. US imports of beef in 2024 rose by +1.0% to 3.690 billion pounds. US exports of beef in 2023 fell by -6.3% yr/yr to a record 2.845 billion pounds.
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