By Andrew Griffith
A question was asked recently about the differences in live cattle futures and feeder cattle futures and what those prices actually represent.
The feeder cattle futures price represents an 800 pound Large/Medium frame, #1/#2 muscled steer. For more perspective, feeder cattle futures prices are the expected price of the CME Feeder Cattle index, which are actual cash sales of steers weighing 700-899 pounds in a 12-state region (TX, OK, KS, MO, IA, NE, SD, ND, WY, MT, CO, NM). Thus, the March feeder cattle contract price should be really close to the CME FC index, which means the futures price and actual cash prices are in line.
Live cattle futures represent steers and heifers ready to be harvested. Thus, cattle who are ready to exit the feedlot and be sent to a slaughter and packing facility. Based on the live cattle contract, the price should represent steers or heifers grading 70% Choice and 30% Select or higher with a Yield Grade 3. Every steer must weigh 1,050-1,500 pounds and heifers weigh 1,050-1,350 pounds based on contract specifications.
Source : osu.edu