Understanding “Cattle Futures”

[Dan-DK Farms]

Do you understand and apply cattle futures reports? If so, how? I watch Beef market central and Cattle market mobile but don’t fully understand them and know how to time my sales.

When I take a load of calves off, about the only thing that I’m sure of is that prices were better the previous week and will be better next week.

 

[KAstocker]

Demand is highest for fat cattle in the spring, which translates to highest demand for feeders in the fall.

Most calves are born in the spring, which puts that group into the highest supply.

Try to balance those thoughts with when your resources are available.

 

[Lee VanRoss]

Contact Hillary Clinton for all you need to know about cattle futures.

 

[Dan-DK Farms]

LOL! Ain’t that the truth.

 

[Dave]

The entire futures market is mostly the shiny shoe boys gambling. I do have a friend who has a lot of money. His brother got to playing the futures. His brother told me that he got up $400,000. A few days later he was down $400,000. When he get to even he sold out and swore never to play it again. That said I do know that feedlots will use the futures market to lock in a value. There is some nerdy guy in the corner of the office who understands it and is buying or selling future positions. I have sat in a Superior sale where tens of thousands of head are sold in a day. The buyers are on the phone and as the futures market goes up and down during the day so does the price they pay for cattle.

 

[SBMF 2015]

Futures are a tool for the big boys. They are usually based on 40,000lb contracts. You buy cattle on paper and sell on paper, but never deliver real cattle.
If I buy a load of feeder cattle, and I know it will take X dollars for them to break even I can buy a put to place a floor in my market. Around the time I deliver the cattle to the packers, I sell my put. Hopefully the difference between the live price and the put is profit.
That is the bare bones basics.
I think I have that right. Lol. It's been 20years since I studied this.

 

[Silver]

I might do this on paper for awhile and see how it works.

Here's a simple tool to hedge feeder cattle

Based on two moving averages, this tool takes the emotion out of hedging.

www.farmprogress.com

 

[uplandnut]

Silver, I'd be curious to hear what you find with doing this. Correct me if I'm wrong but the whole futures game seems like it could put a person in the poorhouse real quick?

 

[KAstocker]

I might do this on paper for awhile and see how it works.

Here's a simple tool to hedge feeder cattle

Based on two moving averages, this tool takes the emotion out of hedging.

www.farmprogress.com

Thanks for posting. That's very interesting. I will see if this works on paper also. I know last Thanksgiving when I wanted to buy weaned calves, the futures market was around 150 for this coming labor day, which would have made a killing. Now the futures market is around 160! Something like this could prove extremely helpful.

I'm not in a position to sell on 50,000 lb loads right now, but I want to be prepared when that time comes, so thank you.

 

[Silver]

Silver, I'd be curious to hear what you find with doing this. Correct me if I'm wrong but the whole futures game seems like it could put a person in the poorhouse real quick?

Futures market scares the hell out of me too, but that's probably a natural reaction to something I don't understand. I think if I do this on paper for awhile I might get more comfortable with it and loose the fear.

 

[shaz]

Those "moving averages" are used in the stock market too and I consider them useless for buying stocks.

 

[Silver]

I think there is a huge difference between hedging a commodity that you produce and picking stocks to invest in off the board.

 

[Dan-DK Farms]

I might do this on paper for awhile and see how it works.

Here's a simple tool to hedge feeder cattle

Based on two moving averages, this tool takes the emotion out of hedging.

www.farmprogress.com

As illustrated at the link, it now makes a lot of sense to me.

Thanks to all for responding.

 

[Caustic Burno]

Long time ago I simplified it for myself. Corn going up 4 to 5 wts going down 6 to 7 up.
Corn going down 4 to 5’s up 6 to 7’s down.
Now is where the sharp pencil comes in. What’s the input cost to get to 7 from 5 versus the sale price.

 

[WFfarm]

Big City people making money off cattle that have never owned or been within 100 ft of cattle, except at a petting zoo.

Wonder what would happen if someone gave them the Game Stop treatment?