Pure Hedge Cattle 9-16

Peter McGinn General Commentary Leave a Comment

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 the attempt to retest the April high failed. Feeder Cattle futures has lost about $3 from the opening on Monday to the close on Friday in the trading week 9/12-9/16 and has hit certain retracement levels on the chart in the near term. One factor that will keep prices lower is the price of feed remains high and the second factor is the potential 100bpm by the Fed to try and curb inflation. 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
OCT  
140.325$130
138.200$180
136.100$40
NOV 
 140.600$240
 138.400$160
 136.200$200
DEC   
 1461.600$640
 1441.250$500
 140.650$260

*Cost in above table does not include commissions and fees

LIVE CATTLE– CALLS

MONTHSTRIKEPRICEPREMIUM COST
OCT  
150.300$120
148.725$290
146.1.500$600
NOV  
 1503.175$1270
 1484.500$1800
 1466.100$2440
DEC   
 1561.375$550
 1541.975$790
 1522.950$1,180

*Cost in above table does not include commissions and fees

FEEDER CATTLE–CALLS

MONTHSTRIKEPRICEPREMIUM COST
OCT  
 188.675$337.5
 190.475$237.5
 192.400$200
NOV   
 1881.800$900
 1901.250$562.5
 1921.050$525
JAN   
 1903.275$1637.5
 1922.675$1337.5
 1942.250$1125

*Cost in above table does not include commissions and fees

FEEDER CATTLE–PUTS

MONTHSTRIKEPRICEPREMIUM COST
OCT  
 1761.175$587.5
 1782.000$1000
 1802.875$1437.5
NOV   
 1803.000$1500
 1823.950$1975
 1844.950$2475
JAN   
 1804.400$2200
 1825.275$2637.5
 1845.975$2987.5

*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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