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It is significant to remember that trading in this market carries significant risks, is not suitable for everyone, and should only be done with risk capital. Any investment could possibly lose more money than they initially put in.
What do futures contracts for livestock mean?
A legally binding contract for the future delivery of cattle at a certain price is known as a livestock futures contract. A futures market standardises the contracts' amount, quality, delivery location, and delivery time. The only variable is the cost.
Because they have a history of being lock limit up and down in the same day, meats have long been regarded as one of the more volatile sectors. On days when there is a USDA report, this typically occurs. Although the markets can be quite chaotic on any one day, this is not to say that meats don't trend.
Speculators and hedgers
Any futures market's main purpose is to offer a centralised market to individuals who are interested in purchasing or selling physical commodities in the future. Hedgers can lessen risk from unfavourable price changes in the cash market thanks to the meat futures market. Food service providers, ranchers, and food processors are a few examples of hedgers.