Pure Hedge

Peter McGinnGeneral Commentary

In my opinion, the outlook for the cattle market has put in a near term high. Today’s move being a dollar lower makes me believe that Monday’s trade was just a spike higher based off the report and traders used Tuesday to reposition for a reversal to the downside. Cash market trades have seemed to stabilize a little giving support to the market as well but has been on light volume overall. 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

MONTHSTRIKEPRICEPREMIUM COST
DEC146 .050$20
144.025$10
           140  .012$4.80
FEB148.800$320
 146.550$220
 144.400$160
    
APR1542.150$860
 1521.650$660
 1501.275$510

*Cost in above table does not include commissions and fees

LIVE CATTLE– CALLS

MONTHSTRIKEPRICEPREMIUM COST
DEC156 .100 $40
158.025$10
160.012$4.80
FEB1562.550$1020
 1581.675$670
 1601.025$410
APR   
 1603.575$1430
 1622.650$1060
 1641.900$760

*Cost in above table does not include commissions and fees

FEEDER CATTLE–CALLS

MONTHSTRIKEPRICEPREMIUM COST
 JAN188.650$325
 190.450$225
 192.300$150
   
MAR1882.850$1425
 1902.275$1137.50
 1921.825$912.50
   
 APR1904.025$2012.50
 1923.325$1662.50
 1942.725$1362.50

*Cost in above table does not include commissions and fees

FEEDER CATTLE–PUTS

MONTHSTRIKEPRICEPREMIUM COST
 JAN1803.550$1775
 1782.600$1300
 1761.850$925
   
 MAR1804.075$2037.50
 1783.275$1637.50
 1762.600$1300
   
 APR1823.975$1987.50
 1803.250$1625
 1782.625$1312.50

*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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