Feeder Futures vs Cash

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JMJ Farms

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I know that cattle orders for stocker operations, backgrounding, and feedlots are based in part on futures. I also understand the basis in my area may differ from Texas or Oregon. My question is.... Is there a way to determine what order buyers will be willing to pay on a given day based solely on futures? Or is it hit and miss depending on the particular order, and how bad the customer who gave the order to the order buyer wants or needs the cattle on that particular day or week?
 
It's tied to it but you'll never be able to figure out how as its a moving target by what is needed and what is available.
On buying stockers I have to look at what they cost vs what they bring in Oak City and what the puts cost to protect them.
Sales start back Monday and I'm thinking (prol wrong) that they will steady get higher so in the first two weeks of sales I want to get some bought. I'll be watching to see what they bring in the city.
 
Thanks Jed. That's kinda what I thought. I've been studying futures and options. Trying to get a good understanding of how they work. I'm not brave enough to play with the futures but the puts and calls seem to be a great tool. I either have to develop a better understanding or find a broker I can really trust for guidance. I bought a LRP policy in September. My local crop insurance agent didn't even know what it was. But I educated him and he got certified and it was very beneficial to me. I know that no one can accurately predict cattle prices 100% of the time. But I sure try to do everything I can to make the best decisions and be profitable. Thanks for responding. Any other info is welcome.
 
A good friend put together 1100 steers for an order. Price was set for September delivery. By September, the buyer had come off 15 cents a pound. He didn't have anywhere else to go with them at the time, for the money. He delivered and took the hit.
 
backhoeboogie":3d31m5r1 said:
A good friend put together 1100 steers for an order. Price was set for September delivery. By September, the buyer had come off 15 cents a pound. He didn't have anywhere else to go with them at the time, for the money. He delivered and took the hit.

Karma is a bit>^. They buyer should have stood by the deal he made. He will get his down the road. Hate that for your friend though. Sounds like he and I may be related.
 
There is no good way to lock in the basis on feeder cattle. I've always thought that if I could figure out how to create an exchange that it may serve some value to both parties to have some of that locked in. The packer will set a basis in the deferred months so that a feedlot can lock in a price however this pricing function is nonexistent in the feeder cattle world. Currently the only way to lock in a forward contract is through something like Superior.
 

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