PURE HEDGE
| CATTLE |
In my opinion, the medium to short term outlook on the cattle market looks to neutral to bearish. The cattle market experienced some long liquidation as well as uncertain cash trades along with a strong dollar which all helped put pressure on the market the past two weeks. The USDA Cattle on Feed report last week came in with the on feed and placed cattle numbers slightly above compared to last year and marketed cattle 6% above last year. 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’ B/E 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 |
| OCT | |||
| 140 | .175 | $70 | |
| 138 | .100 | $40 | |
| 136 | .050 | $20 | |
| NOV | |||
| 140 | .625 | $250 | |
| 138 | .450 | $180 | |
| 136 | .300 | $120 | |
| DEC | |||
| 146 | 2.900 | $1160 | |
| 144 | 2.175 | $870 | |
| 140 | 1.150 | $460 |
*Cost in above table does not include commissions and fees
LIVE CATTLE– CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 150 | .025 | $10 | |
| 148 | .050 | $20 | |
| 146 | .150 | $60 | |
| NOV | |||
| 150 | 1.300 | $520 | |
| 148 | 2.075 | $830 | |
| 146 | 3.100 | $1240 | |
| DEC | |||
| 156 | .575 | $230 | |
| 154 | .925 | $370 | |
| 152 | 1.400 | $560 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 188 | .175 | $87.5 | |
| 190 | .125 | $62.5 | |
| 192 | .100 | $50 | |
| NOV | |||
| 188 | .450 | $225 | |
| 190 | .350 | $175 | |
| 192 | .275 | $137.5 | |
| JAN | |||
| 190 | 1.525 | $762.5 | |
| 192 | 1.275 | $637.5 | |
| 194 | 1.050 | $525 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 176 | 3.650 | $1825 | |
| 178 | 5.025 | $2512.5 | |
| 180 | 6.600 | $3300 | |
| NOV | |||
| 180 | 6.925 | $3462.5 | |
| 182 | 8.500 | $4250 | |
| 184 | 10.200 | $5100 | |
| JAN | |||
| 180 | 8.150 | $4075 | |
| 182 | 9.475 | $4737.5 | |
| 184 | 10.900 | $5450 |
*Cost in above table does not include commissions and fees
CATTLE PRODUCERS HEDGING CALCULATOR
C:\Users\pMcGinn\Documents\Cattle Producer calculator.xlsx
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