Cattle Futures Update
What is your plan if you didn’t use your provinces livestock price insurance program?
Cattle futures may continue higher as in the U.S. slaughter is light and demand staying strong.
The August live cattle, or fat cattle, futures contracts reached its highest level since May 4th yesterday.
Below is a chart of the October feeder cattle contract, which I am currently seeing at the top end of its range.
Cash markets are still at a premium to the futures helping this increase.
Also, there have been talks that China in the long run could be a more significant buyer of US beef.
I wouldn’t put too much emphasis on that though with the varying decisions Trump makes on trade.
The feeder cattle futures contracts have been increasing too.
Seasonally, the feeder futures could stay strong until August, but are starting to hit some short term ceiling they might not get above.
Since there are different futures contract months, you can look at protecting when you sell your physical cattle.
Maybe you want protection only until October or maybe out until January.
This is the type of flexibility that options offer you.
More importantly, you can put on your protection at any time.
So, if the futures seem like they are going to keep increasing you can be patient and spend less for your protection at a later date.
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