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| I have not used the futures market to hedge only LRP. I currently have a LRP policy on some calves that will be weaned soon but the calves currently in gestation have no price protection LRP only goes out to 47-52 weeks max and the unborn calves would maybe only be 400 lbs when it maxes out. I would be forced to sell in February when they should at least be sold in May preferably June-July at a heavier weight. I really don't like being locked into a sale time either.
Hedging on the futures market looks attractive but risky and only goes out about 10 months ahead of time for feeder calves that I can tell.. Getting margin called scares me. I notice many feeders are actually bringing much more than the $2.6 feeder commodity market price. Does that not work in someone's favor to reduce risk since the owned asset is actually worth more than the tool being used to protect?
Anyway how do you all go about hedging when you do this? I would like to hire a some sort of adviser but have a hard time finding anyone let alone one that does not have a conflict of interest and incentive to give sound advice. Is it realistic to be able to hire someone that would give good guidance on this issue?
Are there any other options I am over looking? Thank you. | |
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Hedging Feeders on the Future Market
