February Live Cattle

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A negative basis is a producers best friend. It allows him to make sales at a higher price in the future than is available to him in the present. February cattle have an approximate $5.00-$6.00 basis spread on them. I believe it to absolutly critical that producers use this basis to lock in the price of cattle that will be finished against the February board. The charts show that a trade below $75.25 will take prices out of a 4 month long sideways trading range and also resume the downward trend that October and December are already in. Cattlemen are always faced with bad news on the horizon. This time is not different except, that now, you are paying the highest price for feeder cattle in 10 years, corn production is down, demand is already at one of the highest levels it has ever been, the economy grows worse every day, and last but not least, there is still a record number of cattle on feed. Am I pessimestic? No, I am realistic. There is a strategy available currently that could help cattle producers. If you or your clients need help in protecting inventory from adverse price fluctuation, please feel free to contact me at anytime.

"Shootin' the Bull"
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