txshowmom":dy8rxvyg said:What do the cattle future look like in Texas?
But how much money do we get back from our "investment" in insurance premiums, Bill? Hopefully none, right? We don't have to use the Merc and Board just to speculate. Hedges have saved the tail of many a cattle feeder in this country. That represents capital that is still available to the cattle industry!Running Arrow Bill":g6wi5q45 said:Hey...a "CD" doesn't pay much interest any more; however, you always get ALL your money back plus a modicum of interest...and NO broker's fees"
csmfutures":1tl4ch22 said:A position in futures is speculation, unless it's a hedge. If you have 70 feeder cattle, say 700 lbs, and you sell 1 CME feeder contract (50,000lbs) you have locked in the price in the Major Market. Not the local market. Therefore the risk has gone from a market risk to a basis risk. You are therefore protecting against major price shifts which inevitably hit the local market. Your upside is also gone, because the feeder contract will take away any price gain excepting cash basis and gains in weight price (ie:feeders vs fats).
csmfutures":1tl4ch22 said:If you know agriculture, you know that it's all purely speculation, not an investment. …a cow is speculating.
csmfutures":1tl4ch22 said:Your average bank CD doesn't jump fences, get sick and run up bills, just drop dead or have the market price crash from BSE. Hedging offsets that speculation to a certain degree.
csmfutures":1iytsn74 said:How many producers you know that at some point have sat at the sale barn, coffee shop, whatever.....talking about the $100, $200 a head they just lost. Prices are good right now, so it's easy to forget 5 years ago and the .50 fat cattle.