Learn About Futures Insider for September 29: Live Cattle (Part 3)

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Key terms for this market include:

Choice beef - the high quality beef, just below prime in the grading system. A little over 50 percent of US carcasses qualify as choice grade. They have less fat and marbling than prime.

CWE - the abbreviation for Carcass-weight Equivalent, the weight meat products "converted to an equivalent weight of a dressed carcass" according to the USDA. This includes inedible bits like bone and ligaments.

Foot-and-mouth or hoof-and-mouth disease - A viral disease that is extremely contagious and can be fatal. It affects many cloven-hoofed animals. An identified breakout can often lead to quarantine and culling of herds.

Key Uses
Beef cattle brings us steak, ground beef for hamburgers, roast beef, and a variety of other meat cuts which provide the majority of zinc in the average American diet. Beyond the obvious food products that come from cattle, medicines like insulin and estrogen come from their glands. Cowhide and leather, glue, and fertilizers are all byproducts of the beef industry. Tallow - also known as beef fat - is also an ingredient in various household and hygiene products like soap, candles, and cosmetics. Bones and horns are a source of gelatin used in marshmallows, candies, and other confections.

Key Concerns

In addition to the following variables, if you are trading live cattle, you will also want to be aware that the USDA issues reports that may impact the futures market including Cattle on Feed and Livestock Slaughter . These reports (and others) may be found in the economics and statistics sections of the USDA website.

Import and Export: Restrictions and trade agreements can often impact the quantity of imports and exports to and from various countries.

Health Issues: Concerns over red meat consumption and possible links to colon cancer or saturated fat values are often weighed against beef as a rich source of linoleic acid and B vitamins. As health news comes and goes, domestic consumption or demand may be impacted.

Mad Cow Disease: Otherwise known as bovine spongiform encephalopathy, Mad Cow scares can wreak havoc on the cattle industry and breakouts can lead to massive slaughter and burn campaigns. Since the BSE prion cannot be destroyed by cooking, the panic of spread can easily affect both demand and supply of cattle.

Feed Costs: Higher feed costs can typically affect the weight and rate at which a farmer will take livestock to market. Since cattle are fed a combination of roughage, grain and protein supplements (soybean meal is a popular protein source), prices for corn, alfalfa, soybean, and even wheat can impact choice of feed and affect the feed-to-meat conversion - as well as the number of days on the feedlot.
Part 1: Learn About Futures Insider for September 29: Live Cattle (Part 1)

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