Beef: Trading
Live and feeder cattle futures, and the corn link
What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.CME lists live cattle and feeder cattle futures, the main hedging tools for US feedlots and ranchers. Geman notes that feeder cattle traders must watch cattle and corn at once, which limits liquidity (pdf p. 172). More cattle now move under direct deals between producers and packers, a shift Geman sees as a threat to futures markets (pdf p. 171). Brazil's B3 exchange lists a fed-cattle contract. Internationally, frozen beef sells on negotiated contracts, with export prices tracked by price reporters.
Where it is bought (buyers)
- Feedlots in the US buy feeder cattle at auctions and direct from ranchers
- Packers buy fed cattle on negotiated cash or formula prices linked to the cash market
- Importers and processors in China, the US, South Korea, Japan, Egypt and Southeast Asia buy frozen boxed beef and buffalo meat by the container
Where it is sold (sellers)
- Brazilian, Australian, US, Argentine and New Zealand packers export boxed beef
- Indian exporters ship frozen deboned buffalo meat from APEDA-registered integrated abattoirs
Exchanges and benchmarks
| Venue | Contract | Notes |
|---|---|---|
| CME | Live Cattle, 40,000 lb, physical delivery | hedging for feedlots and packers |
| CME | Feeder Cattle, 50,000 lb, cash-settled on the CME Feeder Cattle Index | hedging for ranchers and feedlots |
| B3 (Brazil) | Boi Gordo (fed cattle), 330 net arrobas, reais per arroba, cash-settled | Brazilian benchmark, settled against the CEPEA/B3 fed cattle indicator |
| India | none | no Indian exchange lists cattle or meat futures |
Contract types
- Negotiated cash and formula pricing for fed cattle
- Forward contracts between feedlots and packers
- Container-lot export contracts for frozen beef, often CFR destination port
- Halal certification and importer plant approvals as conditions of sale
Top trading houses
- Packer-exporters trade directly; specialist meat traders and importers handle much of Asian and Middle East demand
How prices are discovered
- CME live and feeder cattle futures
- USDA AMS mandatory price reporting and boxed beef cutout
- Australian MLA cattle indicators
- B3 Boi Gordo futures and the CEPEA cattle index in Brazil