Livestock & Dairy Futures

Live Cattle futures (LE) are the benchmark for finished cattle ready for slaughter, typically weighing around 1,200 pounds. The US cattle herd has been at multi-decade lows in recent years due to drought and herd liquidation, supporting historically high prices. Live Cattle is one of the few CME contracts that remains physically settled. Major reports include the monthly USDA Cattle on Feed report, the bi-annual Cattle Inventory report, and the weekly Cold Storage report.

Lean Hogs futures (HE) hedge price risk for the US pork industry. Unlike Live Cattle, Lean Hogs are cash-settled to the CME Lean Hog Index - a 2-day weighted average of cash hog prices. The US is the world's largest pork exporter, and demand from China is a major driver of prices. Major reports include the quarterly USDA Hogs and Pigs report and the weekly Cold Storage report.

Feeder Cattle futures (GF) cover cattle weighing 700-899 pounds that are ready to be moved from pasture to feedlot for finishing. Feeder Cattle prices are driven by corn (feed) prices and the supply of weaned calves. The contract is cash-settled to the CME Feeder Cattle Index. The "cattle crush" spread - selling Feeder Cattle and Live Cattle while buying Corn - represents the feedlot operator's margin.

Pork Cutout futures (PRK) complement Lean Hog futures by tracking wholesale pork prices rather than live hog prices. The contract is cash-settled to the CME Pork Cutout Index, which is calculated from USDA-reported wholesale prices for pork primals (loin, butt, picnic, ribs, ham, belly). Pork Cutout futures help packers and food manufacturers hedge wholesale pork exposure separately from live hog procurement.

Class III Milk futures (DC), often called "cheese milk," represent milk used in cheese production - the largest US dairy use category. The contract is cash-settled to the USDA Class III price, which is calculated monthly from Federal Milk Marketing Order (FMMO) formulas using cheese, dry whey, and butter prices. Class III is the most actively traded dairy contract and is used by Wisconsin, California, and other major cheese-producing states for hedging.

Class IV Milk futures (GDK) represent milk used to produce butter and dried milk products. The contract is cash-settled to the USDA Class IV price, derived from butter and nonfat dry milk prices via FMMO formulas. Class IV trades less actively than Class III but is essential for hedging dairy exposure in butter and dry milk processing operations. The Class III/IV spread is a closely-watched indicator of relative cheese vs. butter demand.

Cash-Settled Butter futures (CB) are used by butter producers, food manufacturers, and bakeries to hedge butter price risk. The contract settles to the USDA monthly weighted average butter price from the National Dairy Product Sales Report (NDPSR) survey. Butter prices are highly seasonal, typically peaking in Q4 around the holiday baking season and bottoming in spring as milk production peaks.

Cash-Settled Cheese futures (CSC) hedge wholesale cheese price exposure for processors, food companies, and pizza chains. The contract settles to the USDA weighted average cheese price (40-pound blocks plus 500-pound barrels). Because cheese is the dominant input in the Class III milk price formula, CSC trades closely with Class III Milk futures and is used in "milk crush" spreads against Class III Milk and Dry Whey.

Nonfat Dry Milk futures (GNF) are used by milk dryers, food manufacturers, and infant formula producers to hedge NFDM price exposure. The contract is cash-settled to the USDA monthly weighted average NFDM price. NFDM is a storable commodity used as an ingredient in baked goods, candies, and reconstituted milk - and is a major US dairy export to Mexico, Southeast Asia, and the Middle East.