"To understand commodity futures prices, you need to understand the production and consumption of  the commodity in question."

Meat Complex futures consist mainly of Beef and Pork futures, or Cattle and Hogs.   Though the animals, their breeding patterns, and dietary needs are dramatically different, the same basic themes tend to dominate trade.

The Meat segment of the commodity markets tend toward strength in the winter months.   This is typically attributable towards two factors:

1. Transportation Difficulties
2. Feed Availability

Future Strength in the Winter

Livestock, be it Cattle or Hog, tends to be raised in the Central United States.   This is because of the proximity to feed sources (both grazing land and corn supplies).  Because the production of Livestock tends to be in the Central United States, meat producers rely heavily on inland waterways (such as the Mississippi River and St. Lawrence Seaway) for transporting their goods from production centers to consumption centers.  The bulk of the meat consumption in the United States is on the two coasts, as this is where the population is.

During the Winter months, transportation via barge can be "dicey".  This tends to create holes in supply, and prices rise.   Also adding to winter price strength is the fact that grains are cheap (post harvest), so Livestock producers tend to withhold supply to fatten it with "cheap" grain.

Livestock Markets for Beginners

Live Cattle and Lean Hog futures are perfect markets for beginner traders.  These markets tend to have little overnight movement, and hence "slippage" tends to be less.  Also, the meat markets tend to trend fairly well, because supply and demand are determined by major macro-economic factors: breeding decisions, consumer tastes, income and population levels, etc.   Because supply and demand doesn't change dramatically in short periods of time, prices tend to have prolonged moves when it does trend.

Conclusion

Today's Meat markets offer a tremendous amount of opportunity for the astute speculator.  Be sure to pay close attention to the seasonal tendencies of the Meats, as this segment of the commodity futures markets is extremely seasonal in nature.

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