PURE HEDGE
| CATTLE |
In my opinion, the medium to short term outlook on the cattle market looks to be bearish. In review of the daily charts, December fat cattle had a runup to 152 and attempt to retest the April high failed as now the market has had 3 consecutive lower sessions. Feeder cattle back month contracts are should be looked at being bought in the near term to avoid upside price risk as the prices have rallied slightly and closing just positive for the week. With the small rally in feeders but high feed costs, I believe the market is starting to put in a near term top and is at risk of retracing back down 30%. 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 |
| SEP | |||
| 140 | .125 | $50 | |
| 138 | .05 | $20 | |
| 136 | .025 | $10 | |
| OCT | |||
| 140 | 1.250 | $500 | |
| 138 | .800 | $320 | |
| 136 | .500 | $200 | |
| DEC | |||
| 146 | 2.625 | $1050 | |
| 144 | 2.000 | $800 | |
| 140 | 1.150 | $460 |
*Cost in above table does not include commissions and fees
LIVE CATTLE– CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| SEP | |||
| 150 | .012 | $4.80 | |
| 148 | .025 | $10 | |
| 146 | .100 | $40 | |
| OCT | |||
| 150 | .350 | $140 | |
| 148 | .650 | $260 | |
| 146 | 1.125 | $450 | |
| DEC | |||
| 156 | 1.275 | $510 | |
| 154 | 1.825 | $730 | |
| 152 | 2.525 | $1,010 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 188 | 2.200 | $1,100 | |
| 190 | 1.650 | $825 | |
| 192 | 1.200 | $600 | |
| NOV | |||
| 188 | 3.550 | $1775 | |
| 190 | 4.975 | $2487 | |
| 192 | 2.225 | $1112.5 | |
| JAN | |||
| 190 | 4.950 | $2475 | |
| 192 | 4.200 | $2100 | |
| 194 | 3.550 | $1775 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 176 | 1.450 | $725 | |
| 178 | 1.950 | $975 | |
| 180 | 2.600 | $1300 | |
| NOV | |||
| 180 | 2.700 | $1350 | |
| 182 | 3.425 | $1712.5 | |
| 184 | 4.250 | $2125 | |
| JAN | |||
| 180 | 4.100 | $2050 | |
| 182 | 4.850 | $2425 | |
| 184 | 5.675 | $2837.5 |
*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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