[1] Conversely, meat packers, and merchant importers can hedge future buying prices for cattle.
[2][3] Producers and buyers of live cattle can also enter into production and marketing contracts for delivering live cattle in cash or spot markets that include futures prices as part of a reference price formula.
[7] The deliverable assets for the contracts are 40,000 pounds of 65% Choice, 35% Select, Yield Grade 3 live steers or live heifers, as defined by the United States Department of Agriculture (USDA) "Official United States Standards for Grades of Slaughter Cattle", or producing 65% Choice, 35% Select, Yield Grade 3 steer or heifer carcasses, as defined by the same standard.
[10] A larger number of buyers and sellers in the futures market allows those market participants to incorporate more demand and supply information, such as weather, disease, imports, exports, and world events, into the futures price compared with cash price.
Its weighting in these commodity indices give live cattle futures prices non-trivial influence on returns on a wide range of investment funds and portfolios.
Conversely, traders and investors have become non-trivial participants in the market for live cattle futures.
Depending on the operation, producers purchase corn, soybean meal, and other commodities as feed.