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Feeder Cattle Trading
Feeder Cattle Trading Defined and ExplainedFeeder cattle are those steers or heifers that are mature enough (600-800 pounds) to be placed into a feedlot, where they can be fattened prior to slaughter. These feeder cattle may be backgrounded or green, but feedlots from individual operations to large-scale commercial operations are constantly seeking this flow of raw material to replace the live cattle that have been moved from the feedlots to slaughter.
Feeder Cattle InvestingA large portion of feeder cattle investors are involved in the industry and trade
feeder cattle futures to protect themselves from price fluctuations. Individuals exploring the possibility of
investing in feeder cattle should first spend a significant amount of effort gathering information about the market. The beef business is quite involved and has evolved as technology increasingly enters into the cattle pipeline. New investors should not expect to be able to find one book to answer all their questions about beef production and the nuances of trading. Feeder Cattle Prices/RatesFeeder cattle futures are traded at CME Group along with the live cattle and lean hog futures contracts. While live cattle futures are based on physical delivery of animals to designated points in the United States, feeder cattle futures are cash-settled, based on the CME's feeder cattle index, a seven-day weighted average of United States Department of Agriculture (USDA) prices from a 12-state Midwest region. Medium #1 and Large #1 feeder steers weighing between 700 and 849 pounds are included in the calculation, except for those identified as fancy, thin, fleshy, gaunt, or full. A feeder cattle futures contract is 50,000 pounds. One point in the feeder cattle trading arena $0.0001 per pound or $5.00, but the minimum tick size is $0.00025 per pound or $12.50. Contract months are January, March, April, May, August, September, October and November. Feeder Cattle FundamentalsBreeding in the cattle herd typically takes place in late spring or early summer, producing a calf crop in the following spring after a 10-month gestation period. It will take more than a year for a calf to move through the weaning and early growth period to reach the feeder cattle stage (650-850 pounds). Depending on the backgrounding process used, most numbers of feeder cattle typically are ready to move into the feedlot in late summer or fall at a time when larger feed grain supplies are becoming available from harvest and prices are at seasonal lows. Feeder Cattle NewsMost states have weekly feeder cattle auction summaries that can be useful, especially if from key states where feeder cattle are a major market. Many feeder cattle futures traders and others in the industry use auction data to evaluate pricing and trends for the feeder cattle contract. Basically, any USDA report that deals with live cattle or meat markets can also be helpful to feeder cattle futures trader. Of particular importance to feeder cattle futures traders is the published feeder cattle index, which is a seven-day weighted average of USDA prices from a 12-state region: Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. The index assigns the same importance to the index value for every pound of feeder steer sold during the previous seven calendar days, regardless of when or where it was sold. The prices encompass the physical auctions, video and Internet sales as well as direct trades. USDA feeder cattle index calculations can be obtained by accessing the USDA website.
Feeder Cattle Trading InformationFeeder Cattle Trading History
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Softs Jim Wyckoff, Senior Analyst, TraderPlanet.com July sugar closed down 41 points at 15.44 cents yesterday. Prices closed near the session low on profit-taking pressure. The key "outside markets" were mixed for the sugar futures market yesterday, as the U.S. stock indexes were steady-higher, crude oil prices were steady-lower and the U.S. dollar was lower. Sugar has been trading in a sideways range at higher levels for three weeks. Bulls need to push prices above this trading range to gain fresh power. That means pushing and closing prices above the May high of 16.03 cents. Sugar bulls do still have the near-term technical advantage. Prices are still in a seven-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to push and close prices above technical resistance at 16.03 cents. Bears' next downside price objective is to push and close prices below solid technical support at 14.90 cents. First resistance is seen at 15.75 cents and then at yesterday's high of 15.88 cents. First support is seen at yesterday's low of 15.40 cents and then at last week's low of 15.26 cents. Livestock Jim Wyckoff, Senior Analyst, TraderPlanet.com August live cattle closed down $0.20 at $81.62 yesterday. Prices closed nearer the session low yesterday and closed at a fresh two-month low close. The key "outside markets" were bullish for the cattle futures market yesterday, as the Soy Complex, Grain Futures Jim Wyckoff, Senior Analyst, TraderPlanet.com
July soybeans on Friday closed firmer and near mid-range. The key "outside markets" were bullish for soybeans Friday, as the U.S. stock indexes were firmer, crude oil prices were higher and the U.S. dollar was sharply lower. Bulls do still have the near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at $12.50 a bushel. The next downside price objective for the bears is pushing and closing prices below solid support at $11.00 a bushel. First resistance for July soybeans is seen at Friday's high of $11.93 and then at last week's high of $12.00 3/4. First support is seen at Friday's low of $11.75 1/4 and then at $11.64. [...]Metals Jim Wyckoff, Senior Analyst, TraderPlanet.com August gold futures closed up $7.60 at $962.80 yesterday. Prices closed nearer the session high yesterday, hit a fresh nine-week high and scored a bullish "outside day" up on the daily bar chart yesterday. Gold bulls have the near-term technical advantage and gained fresh upside momentum yesterday. Prices are in a six-week-old uptrend on the daily bar chart. Bears' next downside price objective is closing prices below solid technical support at $920.00. Gold bulls' next upside price objective is to push and close prices above solid technical resistance at the March high of $970.00. First resistance is seen at yesterday's high of $966.70 and then at $970.00. Support is seen at $955.00 and then at $950.00.
Softs Jim Wyckoff, Senior Analyst, TraderPlanet.com July sugar closed down 20 points at 15.74 cents yesterday. Prices closed near mid-range and were pressured by profit taking. Also, the key "outside markets" were mostly bearish for the sugar market yesterday, as the U.S. stock indexes were weaker and the U.S. dollar was stronger. Sugar bulls still have the near-term technical advantage. There are still no early technical clues that a market top is close at hand. Prices are still in a seven-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to push and close prices above technical resistance at 17.00 cents. Bears' next downside price objective is to push and close prices below solid technical support at 14.90 cents. First resistance is seen at yesterday's high of 15.93 cents and then at the contract high of 16.05 cents. First support is seen at yesterday's low of 15.51 cents and then at 15.25 cents. Wyckoff's Market Rating: 7.5
Livestock Jim Wyckoff, Senior Analyst, TraderPlanet.com August live cattle closed up $0.05 at $83.82 yesterday. Prices closed near the session high again yesterday on more tepid short covering in a bear market. Prices last Friday did produce a bullish weekly high close. The key "outside markets" were mostly bullish for the cattle market yesterday, as the Jim Wyckoff, Senior Analyst, TraderPlanet.com July soybeans on Friday closed weaker and near the session low on profit-taking pressure. Bulls still have the solid near-term technical advantage. Prices are still in an 11-week-old uptrend on the daily bar chart. The next upside price objective for the bean bulls is to push and close prices above psychological resistance at $12.00 a bushel. The next downside price objective for the bears is pushing and closing prices below solid support at the April high of $10.64 1/2 a bushel. First resistance for July soybeans is seen at $11.77 1/2 and then at last week's high of $11.89 1/2. First support is seen at Friday's low of $11.64 and then at $11.50. Energies Jim Wyckoff, Senior Analyst, TraderPlanet.com July crude oil closed down $1.03 at $61.00 a barrel yesterday. Prices closed near mid-range yesterday and were pressured on profit taking and a lower
Metals Jim Wyckoff, Senior Analyst, TraderPlanet.com June gold futures closed up $12.80 at $939.50 yesterday. Prices closed near the session high and hit a fresh two-month high yesterday. Prices were again supported by a weaker U.S. dollar yesterday. Gold bulls have the near-term technical advantage and gained fresh upside momentum yesterday. Prices are in a four-week-old uptrend on the daily bar chart. Bears' next downside price objective is closing prices below solid technical support at this week's low of $915.20. Gold bulls' next upside price objective is to push and close prices above solid technical resistance at the March high of $970.00. First resistance is seen at yesterday's high of $941.00 and then at $945.00. Support is seen at $935.00 and then at $930.00.
Softs Jim Wyckoff, Senior Analyst, TraderPlanet.com July sugar closed up 2 points at 15.63 cents yesterday. Prices closed near mid-range yesterday. Sugar bulls have the near-term technical advantage. There are still no early technical clues that a market top is close at hand. Prices are still in a five-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to push and close prices above technical resistance at 17.00 cents. Bears' next downside price objective is to push and close prices below solid technical support at last week's low of 14.90 cents. First resistance is seen at yesterday's high of 15.91 cents and then at the May high of 16.03 cents. First support is seen at 15.50 cents and then at yesterday's low of 15.37 cents.
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