In my opinion, the medium to short term outlook on the cattle market looks to be bearish. In review of the daily charts, December live cattle has seemed to form a double top but closing down near the first level of support at $148. Feeder cattle back month contracts should be looked at being bought in the near term to avoid upside price risk with the premium values of the calls losing value due to the selloff in the feeder cattle market this week. The USDA Cattle on Feed report came in with the on feed and placed cattle numbers slightly above compared to last year and marketed cattle 6% above last year which was in line with the estimate. 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 | .350 | $140 | |
| 138 | .200 | $80 | |
| 136 | .125 | $50 | |
| NOV | |||
| 140 | .500 | $200 | |
| 138 | .350 | $140 | |
| 136 | .250 | $100 | |
| DEC | |||
| 146 | 2.425 | $970 | |
| 144 | 1.800 | $720 | |
| 140 | .975 | $390 |
*Cost in above table does not include commissions and fees
LIVE CATTLE– CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 150 | .100 | $40 | |
| 148 | .275 | $110 | |
| 146 | .700 | $280 | |
| NOV | |||
| 150 | 1.975 | $790 | |
| 148 | 2.950 | $1180 | |
| 146 | 4.200 | $1680 | |
| DEC | |||
| 156 | .850 | $340 | |
| 154 | 1.275 | $510 | |
| 152 | 1.900 | $760 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 188 | .425 | $212.50 | |
| 190 | .300 | $150 | |
| 192 | .200 | $100 | |
| NOV | |||
| 188 | .850 | $425 | |
| 190 | .625 | $312.50 | |
| 192 | .450 | $225 | |
| JAN | |||
| 190 | 2.200 | $1100 | |
| 192 | 1.775 | $887.50 | |
| 194 | 1.450 | $725 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–PUTS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 176 | 1.850 | $925 | |
| 178 | 2.700 | $1350 | |
| 180 | 3.800 | $1900 | |
| NOV | |||
| 180 | 4.650 | $2325 | |
| 182 | 5.900 | $2950 | |
| 184 | 7.325 | $3662.50 | |
| JAN | |||
| 180 | 6.125 | $3062.50 | |
| 182 | 7.200 | $3600 | |
| 184 | 8.400 | $4200 |
*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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