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    Live Cattle December 2010 (LEZ10)

    107.900+0.900 (+0.84%) 7:08P EST (CME) View Help
    Commodity Price Quote as of Wednesday, May 23rd, 2012

    Contract Specifications

    Symbol LE
    Name Live Cattle (LE)
    Exchange CME
    Trading Months February, April, June, August, October, December (G, J, M, Q, V, Z)
    Trading Unit 40,000 pounds
    Tick Size 0.025 cents per pound ($10 per contract)
    Daily Limit 3.0 cents per pound ($1,200 per contract)
    Trading Hours 9:05a.m. - 4:00p.m. Mon, 5:00p.m. - 4:00p.m. Tues-Thur, 5:00pm - 1:55p.m. Fri CST
    Last Trading Day The last business day of the contract month
    Value of one futures unit $400
    Value of one options unit $400

    CRB Yearbook 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 the 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 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 meat packing plant. Futures and options on live cattle and feeder cattle are traded at the Chicago Mercantile Exchange. Both the live and feeder cattle futures contracts trade in terms of cents per pound.

    Prices - Live cattle futures prices, after posting a record high of 104.7 cents per pound in July 2008, fell sharply in late 2008 due to the financial crisis and the global recession. Cattle producers during the financial crisis ran into problems financing their herds and therefore sent cattle to slaughter in relatively high numbers, increasing the supply of beef on the market and pushing prices lower. The number of cattle on feed in 2009 fell by 0.4% to 22.2 million head, adding to the 4.7% decline seen in 2008. Live cattle prices then traded basically sideways in the range of about 80-90 cents through 2009, closing the year slightly higher by 1.8% at 86.0 cents. Cattle prices were able to stabilize in 2009 as demand picked up with the economic recovery that emerged in mid-2009. On the other hand, a major bearish factor during 2009 was a 48% decline in US live cattle exports to 55.83 million head as US cattle trade continued to be hurt by the perception of mad cow problems in the US, even though there has not been a case of mad cow in the US since 2006. Asian governments and consumers continue to resist importing or consuming US beef.

    Supply - The world's number of cattle as of January 1, 2009 fell -2.1% to 956.690 million head, which is a 3-1/2 decade low. As of January 1, 2009 the number of cattle and calves on farms in the U.S. fell -1.6% to 94.491 million, which is the lowest level since the 1959 figure of 93.322. World production of beef and veal in 2009 fell -2.2% to 56.782 million metric tons (carcass weight equivalent) and the USDA is forecasting a drop of -0.7% to 56.405 million metric tons in 2010. U.S. commercial production of beef in 2009 fell -2.29% to 25.964 billion pounds and the USDA is forecasting a further drop of -1.9% in 2010.

    Demand - World consumption of beef and veal in 2009 fell -2.3% to 56.116 million metric tons and the USDA is forecasting a further drop of 2.6% in 2010 to 55.972 million metric tons. U.S. consumption of beef and veal in 2009 fell -1.1% to 12.310 million metric tons and the USDA is forecasting a further drop of 1.2% in 2010 to 12.158 million metric tons.

    Trade - U.S. imports of live cattle in 2009 fell by -15.5% to 1.930 million head, but remained well above the low levels seen when mad cow disease caused the U.S. to close the Canadian border to live cattle in 2003. U.S. exports of live cattle in 2009 fell by -48.1% yr/yr to 55.582 head, but still up from the multi-decade low of 21,607 in 2005 caused by cattle trading bans by key U.S. trading partners.

    By weight, U.S. imports of beef in 2009 rose +6.54% to 2.703 billion pounds and the USDA is forecasting an increase of +3.4% to 2.795 billion pounds in 2010. U.S. exports of beef in 2009 fell by -1.4% to 1.861 billion pounds but the USDA is forecasting a rise of +9.6% to 2.040 billion pounds in 2010. That, however, remains far below the levels of about 2.5 billion pounds seen before mad cow disease hit in December 2003 and largely shut down U.S. beef exports.

    Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.
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