Live cattle are fully grown cattle that have reached the necessary weight for slaughter. This weight falls between 1,200 and 1,400 pounds. Feeder cattle are calves that have been weaned and weigh between 600 and 800 pounds. When the cattle reach feeder weight, they are put in a feedlot where a high-energy diet that consists mostly of corn and other grains helps them reach live cattle weight (approximately another 500 pounds).
Factors That Affect Cattle Prices
Because weaned calves are fed a diet consisting primarily of corn, corn prices have an impact on how high or low the price of a weaned calf will go. Once the calves are live, it is mostly the supply and demand for beef that will affect the pricing.
The Driving Factors in Live Cattle Prices Exceed
The driving factors in the pricing of live cattle exceed the driving factors in the feeder trading prices. As mentioned, beef demand is the top factor. If there is a recession in the economy, beef prices will fall. Beef is more expensive than pork or poultry. So during hard times, consumers will buy the least expensive meats so they can get more food for their dollar.
Cattle Trading and the Cattle Crush
Cattle trading can sometimes involve the trading of feeder cattle bundled with corn futures for live cattle. This gives the cattle trader an immediate income because they now have cattle that are ready for breeding and/or slaughter.
Reasons to Invest in Live Cattle
The global economy is a very good reason to invest. The demand for beef continues to grow not just nationally but internationally. During an inflation hedge, live cattle deliver immediate income if purchased when the inflation is down rather than up. This increases the profit margin for the cattle post-trading. Many traders view trading cattle as a way to diversify their portfolio. No matter what the reason you have for trading, be sure to do your research. The price of live cattle is volatile, so when cattle trading, it’s wise to have a good mixture of live and feeder cattle.
Consult Compass AG Solutions today, for guidance on the trading of your cattle in order to minimize risk and strategically trade.
