Ah, the good old days. It seems like just last June, the U.S. top meat producers were Cargill, Tyson, Swift, National Beef Packing and Smithfield Beef. Not exactly brand names in the minds of consumers, but since the last wave of consolidation in the '80s and '90s (where the top-four meat-producing companies went from handling 36% of all cattle slaughter operations to controlling 78% of the market), it's at least been stable.

But then Brazil's JBS started its buying spree. In June last year, Latin America's largest beef producer gobbled up Swift & Co., the United States' third-largest beef processing company. Not only did this get them a foothold in the U.S., it made them the world's largest meat producer overnight - ahead of Tyson and Cargill. And it looks like the big will just keep getting bigger. This week, JBS announced its intentions to buy National Beef Packing Co., as well as the beef processing and cattle feeding operation arm of Smithfield Foods Inc.

Ginormous deals like this are never a foregone conclusion, and there are mixed feelings on how this consolidation is going to affect the market. The Bull Bulls believe that it will be good in the short term because the beef processors will still need to compete for cattle. The Cow Bears believe this is putting too much of the industry under one company's control - especially since the Smithfield deal includes its share of Five Rivers Ranch Cattle Feeding, the world's largest cattle feeding company. This potential consolidation comes as the profit margins of meatpackers have been squeezed because of the tight cattle supplies and lower production.

And for the futures market?

If you're just dipping your toe in the water, you first need to understand the different contracts: Live Cattle and Feeder Cattle. The difference is simple: how big your cow is, and where he lives. To qualify for the Live Cattle contract, Bessie has to be somewhere from a calf to about 600 to 800 pounds. Once that little guy hits that target weight, he gets sent off to the feedlot. Once at feedlots, cattle are classified as Feeder Cattle. Feeder cattle stay in feedlots for about three to five months while being fed corn and other grains to bring their weight to an average of 1,250 pounds at slaughter time.

These two contracts have very different seasonal cycles:

Feeder Cattle Weekly Prices

Live Cattle, Weekly Prices

But even without this seasonality, livestock prices have remained relatively flat while other "soft" commodities have seen huge increases in the past few years. So what's really moving prices?

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