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Wholesale beef price gains pushed cash and futures cattle prices higher in recent weeks. The author suggests buying September feeder put options at a 135 per hundredweight strike to lock in profits for spring-calf producers.
Feeder futures fell after a cattle on feed report showed slow marketing relative to placements.
Slow feedlot marketing and expected margin squeeze point to downward pressure on feeder cattle prices in coming months. Producers may hedge with puts to protect against that decline.
site.extension.uga.eduMay 26, 2017After 126 past bearish report events, Feeder Cattle moved a median +0.1% over 5 sessions (52% higher; middle half -1.3% to +2.0%), and +0.6% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
