What Are Other Uses of Beef Cattle

Disclosure: Your back up helps keep Commodity.com running! We earn a referral fee for some brokers & services we list on this page. Acquire more...

In this guide to understanding live cattle as a commodity, we'll explicate why they're valuable and draw how they're produced and what they're used for. We besides list the countries that produce the most cattle and explicate what drives the price.

Interested in how cattle are traded? See our full guide, or if you want to become started trading right now, here are options available in to consider:

Disclaimer: Availability discipline to regulations.
Betwixt 74-89% of retail investor accounts lose money when trading CFDs.

Why Are Live Cattle Valuable?

Live cattle are full-grown cattle that have reached the necessary weight for slaughter. Cattle typically get slaughtered for meat and other by-products when they achieve a weight of between 1,200 and 1,400 pounds, but this tin vary.

The beef industry is a global industry with an economic impact in the trillions of dollars. Beef production creates millions of jobs including suppliers, distributors, and retailers. Ultimately, live cattle produce the beef and by-products consumed effectually the globe.

What is the Difference Betwixt Feeder Cattle and Live Cattle?

Livestock traders distinguish betwixt two types of cattle – feeder cattle and alive cattle. The difference between these two commodities is the phase of the product cycle.

Feeder cattle are weaned calves that have reached a weight of between 600 and 800 pounds. At this point, feeder cattle are put in a feedlot where they consume a loftier-energy feed diet consisting mainly of corn and other grains. Feeder cattle typically demand to proceeds more than than 500 pounds earlier they reach slaughter weights, so corn prices take a big impact on feeder cattle prices.

Live cattle, on the other hand, are 'finished' products that are ready for sale to slaughterhouses.

Pinnacle Uses of Alive Cattle

Cattle producers primarily raise cattle as a food source. However, beef accounts for one of several products produced from live cattle:

Globe's Top Alive Cattle Producers

How Practice Ranchers Produce Live Cattle?

Production of alive cattle begins with breeding cows (females) with bulls (males) either naturally or with artificial insemination (A.I.). Cows bred in the summertime will produce calves in the spring.

A natural breeding process generally requires one bull for each 20 to 25 cows. Many producers prefer A.I. considering they tin can better control the genetics of the calves.

Ranchers classify a certain corporeality of acres of pasture or grazing land for each moo-cow and its calf offspring. This is known equally the stocking rate, and it varies from region to region based on weather conditions and maintenance procedures.

In the United states of america –the top cattle-producing nation in the world – the stocking rate can be as low as five acres per moo-cow-calf pair in high precipitation regions of the E to 150 acres in dry, arid regions of the West and Southwest.

A group of cows on a ranch is called a herd. Each cow generally gives birth to one dogie, although some may occasionally produce twins. Not all cows conceive; atmospheric condition, disease and nutrition can all affect conception rates.

Each twelvemonth ranchers typically cull nearly xv to 25% of the cows in their herd and send them to slaughter. The most common reasons for alternative a cow include:

1. Failure to reproduce
2. Advanced age
3. Bad teeth
4. Drought conditions
5. High feed costs

Once the calves are born, a certain number of females are held back to replace the cows that are culled . The remaining calves are raised for eventual slaughter. The timeline for raising cattle is as follows:

1. Starting time six months: Calves remain with the moo-cow and receive their initial nutrition from nursing. Over time, ranchers supplement this nutrition with grass feeding and eventually with grain.
2. Half-dozen to eight months of age: Calves typically weight 500 to 600 pounds at this stage. Ranchers wean the calf from the moo-cow. Some very heavy calves go directly into feedlots, but most pass through stocker operations.
3. Stocker operations: Calves go fed on summer grass, winter wheat or some other roughage until they accomplish the weight of 600 to 800 pounds , which is when they go feeder cattle. This phase generally lasts between six to 10 months.
4. Feedlot: A rancher then has three options :
   1. Continue to raise the cattle on the rancher'south property until they accomplish the designated weight for slaughter
   2. Transport the cattle to a commercial feedlot. A rancher would retain ownership of the cattle while the commercial feedlot feeds them.
   3. Sell the feeder cattle to another rancher or feedlot operation.

Feeder cattle receive high-free energy feed to promote weight gain. They are ordinarily either steers (castrated males) or heifers (females that take not given birth). Cows (females that have given birth) and bulls (sexually intact males) generally are kept for product and not placed in feedlots.

One time the cattle reach slaughter weight, they are sold every bit live cows either directly to a packer or through an auction. Packers slaughter the live cows and sell all the meat and past-products from the animals.

What Drives the Price of Live Cattle?

Some of the specific factors that move live cattle prices include:

1. Beefiness demand
2. Cattle feeding spreads
3. Cattle on feed report
4. Feed prices

Beef Need

Consumer incomes are one of the major drivers of beef demand and live cattle prices.

Beefiness is more expensive than pork or poultry, and need for animal proteins often shows price elasticity. During previous recessions, beef prices have fallen in response to lower demand and during robust economic expansions, beef demand and prices accept risen.

Cattle Feeding Spreads

Cattle traders oftentimes construct hedges to merchandise the human relationship betwixt (i) the price of alive cattle and (2) the toll of feeder cattle and grains.

One such spread is the cattle crush. In this spread the trader might buy (or sell) feeder cattle and corn futures and sell (or buy) an equivalent weight amount of live cattle. Traders take to guess the hedge ratios of the different components in order to be completely hedged.

As the cost of feeder cattle moves college (or lower), spread traders expect the price of live cattle to follow in the same management. In other words, market participants mostly wait at that place to be a high correlation between feeder cattle and live cattle prices.

Cattle on Feed Study

This monthly report by the United states of america Department of Agriculture (USDA) contains important data that can often dramatically move markets. The written report lists 3 central pieces of data:

1. Cattle and calves on feed – A measure of how many cattle volition end up for processing in a few months.
2. Placements – The number of cattle in feedlots that are being fed to produce a grade of 'select' or better by the USDA.
3. Marketings – Cattle shipped out of feedlots to be slaughtered.

Feed Prices

As with feeder cattle, the price of corn and other feeds is inversely related to the price of live cattle.

However, the reason for this inverse human relationship with alive cattle is slightly unlike. With feeder cattle, corn prices influence the cost of finishing the production. As finishing costs (corn) turn down, buyers are willing to pay more than for the "intermediate" product.

With alive cattle, a rise in corn prices may lead ranchers to bring cattle to marketplace prematurely. This, in plough, creates an oversupply and lower prices.

Practiced Opinions on Live Cattle Prices

Experts have a cautiously optimistic view of alive cattle prices. On the one hand, placements remain high, which suggests that more feeder cattle will be coming into production presently. On the other hand, beefiness consumption remains strong:

…all year long we have seen beef demand defy expectations. The economy is in adept shape, unemployment is low and the consumer appears willing and able to pay for beef.

– Daily Livestock Report

Where Can I Merchandise Live Cattle?

Interested in trading alive cattle? Start your inquiry with reviews of these regulated brokers available in .

CFDs are complex instruments and come with a high gamble of losing money chop-chop due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

Further Reading

• Find out how to start trading live cattle.
• Find a commodities banker

davidsonshypeation.blogspot.com

Source: https://commodity.com/soft-agricultural/live-cattle/

Share this post