| CATTLE |
Expiring February live cattle futures ended the week at $165.20, up 5 cents. Still, that marks a weekly advance of $1.625. Most active April cattle also rose 5 cents to $165.375, ending the week 72.5 cents above last Friday’s close. March feeder futures slid 15 cents to $189.075, thereby marking a weekly rise of $2.55.The USDA Cattle on Feed report stated January feedlot placements at 96.4% of last year, a bit below industry expectations for a 2.9% annual decline. Conversely, January marketings were expected to post a 3.9% annual gain; the USDA figure topped that level, rising 4.2% annually. The net result was a February 1 U.S. large-lot feedlot population of 11.704 million head, down 68,000 from the anticipated figure. The numbers should prove supportive of futures on Monday’s opening. The 10-year average of cash cattle prices historically top in late March, but this year with weights being as low as they are the seasonal top could be coming in Late April in my opinion. Producers are carrying all the risk in the cash market right now if they are not properly hedged. I am still of the opinion that, with feed costs at current prices, and all other costs being equal, $170-160 puts should be bought for breakeven operating costs for feedlots. Cow calf operators, in my opinion [and depending on other variable costs], should be looking at buying cheap $180- $190 puts to protect themselves from any downside risk. In order to take full advantage of price discovery, we must keep an astute eye on potential slaughter numbers and monthly Cattle on Feed reports. Please take a look at the below listed puts and calls, so we can have a productive conversation about hedging your beef production using real examples. Also, select the link at the bottom to use our Cattle producers’ BREAKEVEN CALCULATOR to have a more defined outlook at how you can protect your production. Keep in mind, commissions and fees are not included in the cost of the option.
LIVE CATTLE– PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| APR ($165.375s) | |||
| 165 | 1.825. | $730 | |
| 162 | .850 | $340 | |
| 160 | .500 | $200 | |
| JUN ($161.075) | |||
| 165 | 5.450 | $2180 | |
| 162 | 3.675 | $1470 | |
| 160 | 2.725 | $1090 | |
| AUG ($159.775s) | |||
| 165 | 6.950 | $2780 | |
| 162 | 5.125 | $2050 | |
| 160 | 4.125 | $1650 |
*Cost in above table does not include commissions and fees
LIVE CATTLE– CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| APR ($165.375s) | |||
| 170 | .500 | $200 | |
| 168 | .925 | $370 | |
| 166 | 1.675 | $670 | |
| JUN ($161.075s) | |||
| 170 | .500 | $200 | |
| 168 | .800 | $320 | |
| 166 | 1.250 | $500 | |
| AUG ($159.775s) | |||
| 170 | .725 | $290 | |
| 168 | 1.050 | $420 | |
| 166 | 1.500 | $600 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| MARCH ($189.075s) | |||
| 188 | 2.600 | $1300 | |
| 190 | 1.600 | $800 | |
| 192 | .900 | $450 | |
| APRIL ($193.575s) | |||
| 188 | 6.775 | $3387.50 | |
| 190 | 5.375 | $2687.50 | |
| 192 | 4.125 | $2062.50 | |
| MAY ($194.350s) | |||
| 194 | 6.375 | $3187.50 | |
| 196 | 5.150 | $2575 | |
| 198 | 4.075 | $2037.50 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| MARCH ($189.075s) | |||
| 186 | .875 | $450 | |
| 184 | .450 | $225 | |
| 180 | .150 | $75 | |
| APRIL ($193.575s) | |||
| 186 | .825 | $412.50 | |
| 184 | .550 | $275 | |
| 180 | .250 | $125 | |
| MAY ($194.350s) | |||
| 190 | 1.275 | $637.50 | |
| 188 | .925 | $462.50 | |
| 186 | .675 | $337.50 |
*Cost in above table does not include commissions and fees
CATTLE PRODUCERS HEDGING CALCULATOR
..\..\..\..\..\..\..\Documents\Cattle Producer calculator.xlsx
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Peter McGinn
Account Executive
Walsh Trading, Inc.
Direct: 312-985-0931
Toll Free: 800-556-9411
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