The Learn About Futures Insider for September 29, 2011: Live Cattle

The word cattle can conjure images of wild prairies and rugged western landscapes, cattle drives, wealthy barons, and cowboys. The beef and cattle industry today is a multi-billion dollar industry, and cattle futures on the CME are not only a means for industry professionals to access hedging opportunities, but also an avenue for speculators to participate in cattle trade – with or without the ten gallon hat.

Contract Size: 40,000 lbs

Price Quote & Tick Size: cents per pound; minimum fluctuation is $.00025 per pound ($10 per contract)

Contract Months: February, April, June, August, October, December

Trading Specs: Floor trading is conducted 9:05 am to 1:00 pm CT Mon – Fri; Globex trading Mon 9:05 a.m. – Fri 1:55 p.m. CT. Daily trading halts from 4:00 p.m.-5:00 p.m.

Daily Price Limit: $.03 per pound above or below previous day’s settlement price

Trading Symbols: LC; LE on Globex

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Live Cattle Facts

Cattle have a rich and diverse global history and were among the first domesticated animals, providing a rich source of food as well as animal power for laboring in fields and transport. The word cattle originally meant “possession”, hence the similarity to chattel – but now refers to bovines. Breed registrations across the globe now refer to over 900 different breeds of cattle with some able to trace their bloodlines back for six centuries.

Within the United States, the cattle industry has had significant impact on the history and landscape of several states. Distribution of cattle on feed in the United States is illustrated as follows:

***Data courtesy USDA

Live cattle come from feedlots where they have been fed a diet of grains and hay – usually in an average ratio of over eight pounds of feed per one pound of weight gain. When they weigh at or above 1,000 pounds they are sold to packing houses. This general weight range usually results in a 600-pound carcass that can produce just over 400 pounds of meat. These numbers can change based on a few factors, but this helps illustrate a general idea of weights and meat production.

Cuts of beef are as illustrated below:

Internationally, noteworthy producers, exporters, and importers in 2008 were as illustrated. For reference, the quantities are for 1000 metric tons, carcass weight equivalents:

***Data courtesy USDA

Price highlights for this market include:

• News articles from the 1940s suggest that confusion reigned in the cattle markets amid price controls, regulations, and subsidies until President Truman scrapped these things in 1946. The removal of perceived ceilings led to a jump in cattle prices, to about $27 per hundred pounds for some choice.
• In the 1970s prices were frequently between the $40 and $50per hundred pounds level, but prices spiked in 1973 and 1975 on “cutbacks.” Prices jumped above $60 in 1978 in response to a “low point in the cattle cycle” where producers had cut back on their herd sizes in response to lower prices. (Source: Youngstown Vindicator – May 16, 1978)
• In 1979, prices continued to soar, eventually topping $80 per hundred pounds on forecasts that a beef shortage would continue. Prices retreated from this level, but stayed mostly between $60 and $70 per hundred pounds until the mid-1980s.
• In 1985 greater supplies were cited as the cause for a precipitous price drop back towards the low $50 per hundred pounds.
• Prices were down again in 1996, prompting then-President Clinton to try to take steps including a $50-million beef purchase and opening up of federal lands for grazing in an effort to boost prices. Some analysts claimed that mention of Mad Cow disease on an episode of The Oprah Winfrey Show sparked the price declines.
• Late 2000 – early 2001 brought another spike in live cattle prices, driven by stronger demand which saw prices move above $80 per hundred pounds.
• Discovery of Bovine Spongiform Encephal-opathy (mad cow disease) in Washington in 2003 wreaked havoc on prices, with a range between approximately $75 to $104 per hundred pounds as volatility entered the market. Mad cow concerns cut into beef demand forecasts through the 2000s.
• In 2011, prices went through the $120 level as higher feed costs and other factors brought herd levels to historic lows.

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.

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. does not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.

Pork Belly Roast

ingredients

• 1.5kg pork belly
sea salt and freshly ground black pepper
• 2 red onions, halved
• 2 carrots, peeled and halved lengthways
• 2 sticks of celery, chopped in half
• 1 bulb of garlic, skin on, broken into cloves
• a small bunch of fresh thyme, leaves picked
• 600ml water or stock

method

The lovely thick layer of fat on this particular cut keeps the meat really moist as it roasts, and also gives you an incredible even layer of delicious crackling. Belly is a very underrated cut in the UK, but it is becoming a favourite on gastropub menus, and rightly so. If you’re worried about scoring the crackling yourself, ask your butcher to do it for you, that’s what he’s there for.Prep time: 10 minutesCook time: 2.5 hoursPreheat your oven to full whack, it needs to be at least 220°C/425°F/gas 7.Place your pork on a clean work surface, skin-side upwards. Get yourself a small sharp knifeand make scores about a centimetre apart through the skin into the fat, but not so deep thatyou cut into the meat. Rub salt right into all the scores you’ve just made, pulling the skin apart a little if you have to. Brush any excess salt off the surface of the skin and turn it over. Season the underside of the meat with a little more salt and a little black pepper. Place your pork, skin side-up, in a roasting tray big enough to hold the pork and the vegetables, and place in the hot oven.Roast for about half an hour until the skin of the pork has started to puff up and you can seeit turning into crackling. Turn the heat down to 180°C/350°F/gas 4 and roast for another hour.Take out of the oven and baste with the fat in the bottom of the tray. Carefully lift the pork up and transfer to a chopping board. Add all the veg, garlic and thyme to the tray and stir them into the fat. Place the pork on top of everything and pop the tray back in the oven. Roast for another hour. By this time the meat should be meltingly soft and tender. Carefully move the meat to a serving dish, cover with tin foil and leave to rest whileyou make your gravy.Spoon away any fat in the tray, then add the water or stock and place the tray on the hob.Bring to the boil and simmer for a few minutes, stirring constantly with a wooden spoon toscrape up all those lovely sticky tasty bits on the bottom of the tray. When you’ve got a nice, dark gravy, pour it through a sieve into a bowl or gravy boat, using your spoon to really push all the goodness of the veg through the sieve. Add a little more salt and pepper if it needs it. Serve the pork with the crackling, gravy, some creamy mashed potato, nice fresh greens and a dollop of English mustard.
The lovely thick layer of fat on this particular cut keeps the meat really moist as it roasts, and also gives you an incredible even layer of delicious crackling. Belly is a very underrated cut in the UK, but it is becoming a favourite on gastropub menus, and rightly so. If you’re worried about scoring the crackling yourself, ask your butcher to do it for you, that’s what he’s there for.

Prep time: 10 minutes
Cook time: 2.5 hours

Preheat your oven to full whack, it needs to be at least 220°C/425°F/gas 7.
Place your pork on a clean work surface, skin-side upwards. Get yourself a small sharp knife
and make scores about a centimetre apart through the skin into the fat, but not so deep that
you cut into the meat. Rub salt right into all the scores you’ve just made, pulling the skin apart a little if you have to. Brush any excess salt off the surface of the skin and turn it over. Season the underside of the meat with a little more salt and a little black pepper. Place your pork, skin side-up, in a roasting tray big enough to hold the pork and the vegetables, and place in the hot oven.

Roast for about half an hour until the skin of the pork has started to puff up and you can see
it turning into crackling. Turn the heat down to 180°C/350°F/gas 4 and roast for another hour.
Take out of the oven and baste with the fat in the bottom of the tray. Carefully lift the pork up and transfer to a chopping board. Add all the veg, garlic and thyme to the tray and stir them into the fat. Place the pork on top of everything and pop the tray back in the oven. Roast for another hour. By this time the meat should be meltingly soft and tender. Carefully move the meat to a serving dish, cover with tin foil and leave to rest while
you make your gravy.

Spoon away any fat in the tray, then add the water or stock and place the tray on the hob.
Bring to the boil and simmer for a few minutes, stirring constantly with a wooden spoon to
scrape up all those lovely sticky tasty bits on the bottom of the tray. When you’ve got a nice, dark gravy, pour it through a sieve into a bowl or gravy boat, using your spoon to really push all the goodness of the veg through the sieve. Add a little more salt and pepper if it needs it. Serve the pork with the crackling, gravy, some creamy mashed potato, nice fresh greens and a dollop of English mustard.

Source http://www.jamieoliver.com/recipes/pork-recipes/pork-belly-roast

The Learn About Futures Insider: Pork Bellies

Pork bellies - the streaky meat from the underside of a pig - are the source of "American style" bacon. Since the ancient Chinese started preserving and salting pork nearly 1500 BC, it is likely pork is one of the oldest preserved meats. Nowadays, the belly may be flash frozen and stored. These contract specifications refer to the CME contract.

Contract Size: 40,000 lbs

Price Quote & Tick Size: cents per pound; minimum fluctuation is $.00025 per pound ($10 per contract)

Contract Months: February, March, May, July, August

Trading Specs: Floor trading is conducted MON-FRI 9:05 am to 1:00 pm CT; Globex trading MON 9:05 a.m. - FRI 1:55 p.m. Central Time. Daily trading halts 4:00 p.m. - 5:00 p.m. Central Time

Daily Price Limit: $.03 per pound above or below previous day's settlement price; expandable to $.045 per pound

Trading Symbols: PB; GPB on Globex

Pork Bellies Facts
A larger percentage of hog production occurs in the Midwestern United States and the largest individual state production falls to Iowa, North Carolina, Minnesota, and Illinois. Early access to the eastern coastal cities of the United States via the Erie Canal may have helped create this farming trend. Although pigs are often said to have large appetites and consume everything in sight, today's farming practices tend towards careful diets which result in leaner meat. Most of the feed for hogs will contain corn or soybean meal, likely linking this market closely to grain markets. A large percentage of the thiamin in the average person's diet comes from pork.

Globally, exports, production, and consumption are distributed as follows:


In the US, the per capita consumption of pork compares to beef and chicken as illustrated in the following graph:
Key terms for this market include:

Farrow - a word to describe a litter of pigs or the action of producing a litter of pigs.
Bellies - the boneless cut of meat from the belly of swine

Key Uses

Pork bellies are a food product for bacon or other dishes. Pig fat may even be used for various household items such as weed killers, crayons, antifreeze or chalk.

Key Concern

In addition to the following variables, if you are trading any pork product, you will also want to be aware that the USDA issues a Quarterly Hogs and Pigs report that details domestic hog inventories, as well as the birth rate (a farrow is a litter of pigs or, as a verb, means to produce a little of pigs) and litter sizes for breeding sows. Cold storage reports will also detail monthly supplies of pork bellies.

Feed Costs: Higher feed costs - particularly corn - can typically affect the weight and rate at which a farmer will take hogs to market. If farmers were to bring more hogs to market at lower weights to save on overall feed costs, this may increase supply and possibly depress prices.

Domestic and International Demand: Like other meats, there are regional and religious preferences which can impact the demands for pork. Certain advertising campaigns can work to increase consumption and any health concerns associated with one type of livestock can possibly result in a substitutive demand for another. Trade agreements and available markets for US exports are also of fundamental interest as well as the recent suggestion that increasing wealth in developing nations also increases the regular consumption of meat. Adverse reactions may exist when topics such as Swine Flu (H1N1) make headlines.

How Easing Policy is Important at This Time

This morning, I read this articles on bullion report, i find some interesting news related to financial markets these days. Share with you this:

"The Federal Reserve will be meeting next week and all eyes will be focused on the potential for another round of monetary easing. Speculation abounds as to the scope and depth of their actions, but most analysts are working on the assumption that at least $500 billion in Treasuries will be picked up over the next five months. Considering the global economic climate and the link between gold and the U.S. dollar, what could this easing mean for precious metals moving forward?





Easing is a banking tool that is meant to stimulate economic activity. The Federal Reserve would aim to do this with a round of Treasury purchases. This would keep them on their current course of reducing interest rates and trying to jumpstart the money supply. With these purchases, they get excess reserves to make new money. The effect can be what the name implies – it gives the banks and the economy some breathing room.

The risks to easing run the gamut between the potential for hyperinflation and the chance that the easing will not be long or deep enough to achieve the desired stimulus results. In the present environment, both situations would likely represent a bane to the Federal Reserve and a boon to gold and other precious metals.

Debasing the U.S. dollar by increasing the money supply would likely spur additional interest in gold and other precious metal investment. After all, inflation serves to devalue a regular savings account. The trick to this, and the hope of the Federal Reserve officials who support this course of action, is that the global stage will negate the effect of this round of easing. Basically, if all the other central banks are doing it, there will be no one single losing currency. This kind of “competitive devaluation” might temper the reaction from the market. The caveat is that the increase in money supply on a global level would still be a possible motivator for investors who jump on gold as an inflation hedge.

Even if the inflation-situation does not come into play, or it is successfully combated, there is still an overwhelming amount of debt created by round after round of stimulus aimed at spurring economic activity. This has increased the demand for certain investments – like gold – amid flimsy fundamentals for other financial assets. It will probably mean more business for precious metals as investors seek havens if the stimulus fails and this second round of easing isn’t enough to bolster employment and economic growth.

It will be interesting to see what the Federal Reserve commits to, following next week’s meeting. Guesses seem to be centered on the possible commitment from officials to buy up $100 billion in Treasury debt per month for the next five months. This headline may already be priced into the markets, but recent gains in the dollar set up an interesting situation. The drop in gold prices on the strengthening U.S. currency could have set up perceived value entry points ahead of any additional official announcements. According to a story from Reuters, gold traders in India were already scooping up the metal on lower prices amid their festival and wedding season peaks. (1)

It seems unlikely that the Federal Reserve will fall short of the market expectations. Doing so at this point would bump up the dollar but it would jolt other financial markets in the process. Officials have not been working this hard for this long to rock the boat, despite some member objections to another round of stimulus. To quote Ben Bernanke’s own speech from the beginning of 2009, “The global economy will recover, but the timing and strength of the recovery are highly uncertain.” With this in mind, the effort they could be announcing next week will probably fall in line with their actions thus far. Commit to maintaining a response that adds liquidity and stimulus but keep the door open. This means giving a nudge and a wink but not committing to huge purchases right away. Look for officials to nibble at easing, not gobble.

Summary

There is probably no quick fix to housing and employment issues, but there has been strong effort to repair things since the 2007 start of the crisis. The cumulative efforts of the Federal Reserve could see results at some point, after all, employment is seen as a lagging indicator of the health of an economy. However, until there is a solid compass point that shows tangible recovery and economic strength, fear will still prevail. Fear of economic troubles and fear of future inflation issues as a direct result of continuing stimulus. This means that there is still a proverbial basket of issues from which investors can pull a potential catalyst for higher gold prices.

The Fundamentals For Gold and Silver Trading

There are four important factors, you should think about when trading metals, especially, trading gold and trading silver.

The first fundamental is the relationship between demand and supply current metals. If the demand is excess the supply, the metals price will go up and vice versa. So, you must keep track the moving on futures market to get information.

The second fundamental for the precious metal prices would be low or negative interest rates. If the return on bonds, stocks, real estate and others derivatives is lower than the influence of inflation, the trend to buy gold and silver and others commodities futures like cotton commodity, oil futures, corn commodity…

Another fundamental is the status of the whole economic. In case, there are wars or invasion and serious inflation, investors will change channel investment into precious metals because people are fear that it is safer than other assets. It can easily exchange into other currencies.

The fourth fundamental- the last one is the strength of the USD. As we know, US is famous as the home of gold in the world, so if the US currency is weaken than other major currencies, investor will chase to buy gold.

In conclusion, these above fundamentals are very necessary for who attend to invest in metals commodities. This investment can give many profits and take your money out also. therefore, you should consider all factors can affect your business. Trading in futures and options involves in substantial risk of loss and good chances.

Necessary Tips For Bellies Trading

There are three tips you should care when intend to be a belly trader in pork bellies as well as lean hogs.

The first tip is that practicing trade in paper. This is a practical tool that can help you get confidence in the future market. Thanks to this time, you can know some typical symbol like tick size, daily price limits, so that you can be more skillful in using tools in your trading

The second thing you should care is getting advice from a commodity broker. A practical broker will advise you his experience in futures market, he knows which one is good, which one is bad for trading.

The last tip is you educate yourself. No one can help you if you do not try your hard to learn, you can get your own knowledge by getting newsletter on some commodity websites, e books.

These are basic tips I get and would like to share with all of you, hope it can partly help you success in lean hogs options.

Commodity

Long time ago, i have not visit this blog for some private reason, so now i am come back and hope to see and post useful information for commodity blogger.

As other posts, i focus on commodity news in futures trading market and some basis definition about some commodity items.

Today, i will share the report about gold and us dollars.

Gold prices that are familiar to most traders are quoted in US dollars. This link to the US dollar is quite different from a century ago. When paper dollars first made an appearance, they were backed by gold and silver. The exact amounts specified in the Coinage Act of 1837 were 24.75 grains of gold and 371.25 grains of silver. It takes 480 grains to make a troy ounce. This bimetallic standard, as it was known, was dropped in 1900 when the Gold Standard Act set the dollar as 23.22 grains of gold or $20.67 for a troy ounce.

The quantity of grains per dollar was lowered on more than that single occasion. In the 1930s, it was 13.71 grains which put the price per troy ounce of gold at $35. By the early 1970s, a troy ounce of gold was over $40 and President Nixon had ended the redemption of currency for gold. The currency was allowed to float. When the Federal Reserve began to increase the money supply the value of the US dollar fell. This kind of currency depreciation, not just in the United States but also in other countries, is often cited as a reason for the increased value of gold.

The recent fallout from the housing and credit issues have contributed to another round of currency depreciation and some historic gains in the US dollar. The lack of imminent economic recovery could fuel several issues to move the US dollar and gold by extension.

The first factor to consider is the effort to stimulate confidence and economic growth. The Federal Reserve has pledged to keep historically low interest rates and various forms of stimulus money and programs have been set into motion by the US government. This has led to an influx of money and an even wider deficit. Sure, other nations across the globe have the same issues which can sometimes bolster dollar investment. But generally speaking, these efforts have pared back the value of the dollar, contributing to the gain in gold prices. These efforts have not borne fruit yet, and that kind of flop can affect general investor and consumer confidence. That leads to the second factor to be aware of, the investor’s perception of the US economy.

The average investor needs to have confidence that the economic condition in the United States is improving; otherwise, there will be hesitation when it comes to moving investment direction. For most people, the fear of the collapse in the stock market and other markets brought a general exodus from those assets and a plunge into precious metals. Every bad or benign economic report will continue to weigh on those investors. A true signal of recovery and sign of how long the good times will last will be needed to inspire more investors to profit taking and an exit from gold positions.