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Feeder Cattle Futures Trading Basics
Feeder Cattle futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of feeder cattle (eg. 50000 pounds) at a predetermined price on a future delivery date.
Feeder Cattle Futures Exchanges
You can trade Feeder Cattle futures at Chicago Mercantile Exchange (CME).
CME Feeder Cattle futures prices are quoted in dollars and cents per pound and are traded in lot sizes of 50000 pounds (23 metric tons).
| Exchange & Product Name | Symbol | Contract Size | Initial Margin |
| CME Feeder Cattle Futures (Price Quotes) | FC | 50000 pounds (Full Contract Spec) | USD 2,025 (approx. 4%) (Latest Margin Info) |
Feeder Cattle Futures Trading
Consumers and producers of feeder cattle can manage feeder cattle price risk by purchasing and selling feeder cattle futures. Feeder Cattle producers can employ a short hedge to lock in a selling price for the feeder cattle they produce while businesses that require feeder cattle can utilize a long hedge to secure a purchase price for the commodity they need.
Feeder Cattle futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable feeder cattle price movement. Speculators buy feeder cattle futures when they believe that feeder cattle prices will go up. Conversely, they will sell feeder cattle futures when they think that feeder cattle prices will fall.
Related Articles
- Buying Feeder Cattle Futures to Profit from a Rise in Feeder Cattle Prices
- Selling Feeder Cattle Futures to Profit from a Fall in Feeder Cattle Prices
- Feeder Cattle Options Basics
- Feeder Cattle Call Option Trading Basics
- Feeder Cattle Put Option Trading Basics
- Hedging Against Rising Feeder Cattle Prices with Feeder Cattle Futures
- Hedging Against Falling Feeder Cattle Prices with Feeder Cattle Futures
How to Start Trading Feeder Cattle Futures
To buy or sell feeder cattle futures, you need to open a trading account with a broker that handles futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as optionsXpress lets you trade futures and futures options as well. optionsXpress also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.
