Texas/New Mexico Stateline | I am talking about the FEEDER futures.
I am telling you that the people that buy calves are using the feeder futures to figure in what they are willing to pay. A big portion the big cattle feeding operations will source their feeders via order buyers and video auctions, cash contracts and hedge that risk in advance of delivery with the feeder futures.
I strongly disagree that we would be better off without the cattle futures market. We would have zero opportunity to hedge against rising and falling prices without it. I firmly believe that the feeder and live cattle futures are flawed, but they can still be used by producers just like grain farmers to minimize market risk. You just have to be disciplined and sell when the price is favorable, and stick with your plan.
Grain futures are no different. They are volatile too, and you throw in basis changes it can be just as "disconnected" as the cattle futures.
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feeder futures - the emperor has no clothes - finally
