Livestock

Billions of people consume meat and other livestock products every day. The exponential growth rate in the world’s population has facilitated an expansion in the livestock industry as producers attempt to meet increasing demand. Advances in technology and breeding practices have led to an evolution within the industry as production transitions from small family- run operations to large corporate production facilities. This commercialization of livestock production has created a layer of complexity that was once extraneous to the industry. The need for livestock producers to actively manage risks is vital to the profitability of their operations whether they are small ranchers or large corporate producers. Livestock futures contracts and options have become a staple in the price risk management strategies of all producers as well as a fertile ground for speculators who seek to capture profits by betting on the underlying’s price movements. To effectively manage the risks associated with raising various types of livestock, understanding all aspects of the livestock industry from the process of raising animals to the external economic factors that affect the prices for livestock and livestock products has become critical.