• Cattle on Feed Report
  Published monthly on Friday afternoons at 2:00 pm Central Time (with a steer/heifer breakdown provided quarterly), this report tracks feedlot inventories, placements and cattle markets and is a leading indicator for near-term supply in the beef production chain.
• Cattle Inventory Report
  Published bi-annually in January and July, this report provides a detailed overview of the total U.S. cattle herd.
• USDA Regional Cash Market Reports
  USDA provides regional price data on live cattle transactions, offering visibility into cash market dynamics throughout the country and providing insight into basis versus futures.
• National Weekly Cattle and Beef Summary
  Offers a summary of boxed beef values, weights, quality grade, purchase type and more, providing a useful snapshot of the week’s market conditions.
• National Daily Boxed Beef Cutout and Boxed Beef Cuts
  Published daily, this report tracks boxed beef prices and volumes, which are critical for gauging wholesale beef demand.
• Livestock Slaughter and Meat Production Reports 
  • Livestock Slaughter
  • Estimated Weekly Meat Production Under Federal Inspection  
  • Actual Slaughter Under Federal Inspection
  • Daily Livestock Slaughter
  These reports offer real-time and retrospective insights into beef production levels, a key input for understanding packer throughput and downstream beef supply.
• World Agricultural Supply and Demand Estimates (WASDE)
  Released on a monthly basis and provides forecasts for supply and use of various U.S. agricultural commodities, including: grains, oilseeds, beef and pork. This can provide insight into feed costs for the cattle industry. 
• Cold Storage
  Tracks food supplies, including beef, held in cold storage. It’s useful for assessing how supply is being managed and whether backlogs or stockpiling are occurring.
• Livestock and Meat International Trade Data
  This dataset covers exports and imports of U.S. beef, providing visibility into global demand trends and trade flows.

The USDA Cattle on Feed report is one of the most widely tracked reports in the cattle space and offers key insight into the current state of U.S. cattle production, which can in turn act as a driver of price action in Live Cattle futures. Traders, producers and processors alike watch Cattle on Feed closely, as it provides updated estimates of feedlot inventories with placements into feedlots as well as marketing’s from feedlots. It offers near-term insight into the beef supply outlook. With the market often reacting to surprises in these numbers, volatility has the potential to increase surrounding the report’s release. In this environment, Live Cattle Weekly options can offer market participants a flexible tool to manage risk or express short-term views.

The monthly Cattle on Feed report is generally released on the third Friday of each month with inventory data applying through the first of that month. Per USDA, the Cattle on Feed survey provides estimates of the number of cattle being fed a ration of grain, silage, hay and/or protein supplements for the slaughter market that are expected to produce a carcass that will grade select or better. This survey is conducted in the 16 largest cattle-feeding states. About 2,000 known cattle feeders with a capacity of 1,000 or more head are enumerated. These feedlots account for roughly 85 percent of all fed cattle in the United States. Looking at both Cattle on Feed and USDA’s Cattle Inventory data from January and July can provide visibility into cattle on feed not included in the survey.

Live Cattle Weekly options offer traders a valuable way to target specific timeframes with reduced premium outlay compared to monthly options. With the ability to give more precise control over event-driven strategies, these contracts allow hedgers and speculators to fine tune their exposure around report dates like Cattle on Feed. Live Cattle Weekly options expire on Monday afternoons, thus offering coverage through Friday Cattle on Feed report releases.

A U.S.-based cattle feedlot operator is currently feeding cattle that he intends to sell in December. Cattle inventories have been tight, and he is hopeful he will receive a good price for those cattle. However, the feedlot operator believes that feedlot placements for the month of October, to be reported on in the Cattle on Feed report on November 21, could be larger than the broader industry expectations he has seen. There is also recent macroeconomic uncertainty that could lead to a possible pullback in beef demand. Both of these factors could result in downward price pressure for finished cattle within the next week.

To manage the potential short-term volatility and increased downside price risk associated with the upcoming report, the feedlot operator purchases Weekly put options. This strategy allows the feedlot operator to manage downside risk at a reduced cost vs. the standard December monthly option. The cost of the Weekly put option is 1.00¢ vs. the cost of the standard monthly December option is 5.00¢ Additionally, the cattle feeder’s expiration timeline is precise and tailored to their specific short-term needs.

Date: 11/18
Live Cattle futures (Dec) price: 230.00

Physical position: 400 head, roughly 600,000 pounds 

Option strategy: Buy 15 Weekly puts @230.00 for 1.00¢ premium

On Wednesday 11/18, the feedlot operator purchases 15 Weekly put options that will expire on Monday 11/24. With the Cattle on Feed report that was released on Friday 11/21, October placements were reported at 99% of the prior year, when average analyst expectations were at 93%. At expiry, the underlying December Live Cattle futures price drops and settles at $227/CWT.

The physical position of the feedlot operator realizes a $18,000 loss in value. However, because he has used Weekly options to construct a short hedge, the loss is offset with a $12,000 gain generated through the options position.

In addition to event-based risk surrounding market reports, there are other factors that can contribute to short-term price risk where Weekly options can provide a temporary hedge without locking in prices over a longer time horizon. Extreme weather, as it pertains to temperature and precipitation, can have both short and longer-term impacts on cattle production. Geopolitical uncertainty, whether it be surrounding trade, or the movement of cattle across regions, can also contribute to elevated risk in the market.

In January, a meat packing company agreed to deliver a larger quantity on one of their beef orders with a wholesaler for the following month. As such, they need to purchase 120,000 more pounds of live cattle, roughly 80 more head of finished cattle, than they previously had planned for in February. Extreme weather is anticipated over the coming weeks throughout the central plains, which could potentially impact the ability to transport cattle and thus the overall short-term supply of market-ready cattle for processing.

In anticipation of the extreme weather exerting upward price pressure on the market, the meat packer decides to utilize Weekly options to limit their exposure. They purchase Live Cattle Weekly call options at the money for 1.80¢ premium. Should the meat packer have purchased the standard February option, the premium would have been 4.00¢ premium.

Date: 1/13 
Live Cattle futures (February) price: 232.00

Physical Position: 80 head, roughly 120,000 pounds

Option strategy: Buy 3 Weekly calls @$232.00 for 1.80¢ premium

The storm that the meat packer was wary of did indeed come to fruition, leading to disruption in the movement of cattle across major cattle producing states as well as difficult conditions for the cattle in the region. This short-term disruption led to a spike in nearby futures prices, with February Live Cattle futures climbing to $238.00 on Monday, 1/26, the day the Weekly calls expire.

The purchase price of the meat packer increases, leading to a $7,200 increase in net cost. However, because he has used Weekly options to construct a long hedge, the increased cost is offset with a $5,040 gain generated through the options position.

A U.S.-based cattle feedlot operator is currently feeding cattle that he intends to sell in December. The cattle feedlot operator had previously put on a short hedge using December futures. He plans to lift his hedge when he sells his cattle. However, the feedlot operator is uncertain about market conditions over the coming weeks due to geopolitical factors. Rather than wait to see if the market moves in his favor, he considers buying calls to give himself the ability to lock in a price where he can lift the hedge. Live Cattle Weekly options allow him to do this, but at a lower cost than using standard options.

Live Cattle futures prices are influenced by physical market report releases, geopolitical risk and shifts in supply and demand. Unpredictable changes in any of these factors can have an impact on physical market positions. Live Cattle Weekly options provide the opportunity for market participants to not only express their views on market moving events but also manage associated volatility. Participants can leverage lower option premiums coupled with greater precision to implement efficient and timely hedging strategies using Live Cattle Weekly options.