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| What are everyones opinion on this as a part of a hedge for calf producers. No I have not done this and probably will just stick with puts/lrp/a few corn calls.
My thoughts.
Feeders are so high partly because grain has been cheap.
Having 37% of the worlds urea supply disrupted makes me think grain likely goes at least modestly higher.
Higher grain maybe even pushes fats higher while defiantly hitting feeders
There are a few big risks to fat cattle. A major recession resulting in less beef consumption or a black swan event/trump "trade deal" to lower beef prices or packing plant "accidental" restrictions to throttle slaughter house supply and crush fat prices. (wouldnt put it past them. But from a supply side point of view fat cattle are pretty restricted over at least the next year..
Overall alot less things that can push fats down compared to feeders. | |
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Buy Fats/Sell Feeders
