PURE HEDGE
| CATTLE |
In my opinion, the medium to long term outlook for the cattle market is bullish. In review of the daily charts, I would suggest this recent move upward, caused by a sudden appearance of heat and dryness, will continue into the 4th and 1st quarter. If the price for Live Cattle sees a rally in the deferred month contracts, look to take advantage of lower strike levels at a cheaper cost to protect downside price risk. Feeder cattle back month contracts are should be looked at being bought in the near term to avoid upside price risk. 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 | 1.525 | $610 | |
| 138 | .950 | $380 | |
| 136 | .575 | $230 | |
| OCT | |||
| 140 | 2.325 | $930 | |
| 138 | 1.725 | $690 | |
| 136 | 1.225 | $490 | |
| DEC | |||
| 146 | 3.450 | $1380 | |
| 144 | 2.700 | $1080 | |
| 140 | 1.625 | $650 |
*Cost in above table does not include commissions and fees
FEEDER CATTLE–CALLS
| MONTH | STRIKE | PRICE | PREMIUM COST |
| OCT | |||
| 188 | 3.600 | $1800 | |
| 190 | 2.950 | $1475 | |
| 192 | 2.900 | $1450 | |
| NOV | |||
| 188 | 4.900 | $2450 | |
| 190 | 4.200 | $2100 | |
| 192 | 4.000 | $2000 | |
| JAN | |||
| 190 | 6.375 | $3187 | |
| 192 | 5.575 | $2787.5 | |
| 194 | 4.875 | $2437.5 |
*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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