In my opinion, I still have a bullish bias for the cattle market in general. Cash markets have put pressure on the futures in recent trading session with reported trades averaging 157.86. I believe near term contracts should look to be bought if there is upside price risk for beef producers. Deferred feeder cattle contracts (late summer/fall) I would consider waiting until there is a possible consolidation in the market in Q2, in my opinion. 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 |
| FEB | 148 | .100 | $40 |
| 146 | .050 | $20 | |
| 144 | .025 | $10 | |
| APR | 154 | 1.150 | $460 |
| 152 | .825 | $330 | |
| 150 | .600 | $240 | |
| JUN | 152 | 2.375 | $950 |
| 150 | 1.850 | $740 | |
| 148 | 1.425 | $570 |
*Cost in above table does not include commissions and fees
LIVE CATTLE– CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| FEB | 156 | 1.975 | $790 |
| 158 | .975 | $390 | |
| 160 | .400 | $160 | |
| APR | 160 | 3.625 | $1450 |
| 162 | 2.575 | $1030 | |
| 164 | 1.775 | $710 | |
| JUN | 158 | 3.375 | $1350 |
| 160 | 2.525 | $1010 | |
| 162 | 1.850 | $740 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| JAN | 188 | .300 | $150 |
| 190 | .150 | $75 | |
| 192 | .075 | $37.50 | |
| MAR | 188 | 3.025 | $1512.50 |
| 190 | 2.300 | $1150 | |
| 192 | 1.750 | $875 | |
| APR | 190 | 4.675 | $2337.50 |
| 192 | 3.750 | $1875 | |
| 194 | 3.000 | $1500 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| JAN | 180 | .700 | $350 |
| 178 | .325 | $162.50 | |
| 176 | .175 | $87.50 | |
| MAR | 180 | 1.850 | $925 |
| 178 | 1.350 | $675 | |
| 176 | .975 | $487.50 | |
| APR | 182 | 1.875 | $937.50 |
| 180 | 1.425 | $712.50 | |
| 178 | 1.075 | $537.50 |
*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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