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Ridgway, IL | Garvo, you know I am a beginner, but I will tell you what I have done as I am in similar situation as Adam.
Our feeders are purchased, with October /November marketing date for the fats. We could have hedged them at 134.5 on the board the day they came home, but I was worried more about getting the animals home safe and healthy. Then live cattle sold off, so we sold our corn as an indirect hedge. I had enough corn to finish all my animals, but sold as much of it off as I could. think long term cattle prices will adjust to feed prices. I am a lot more confident, owning feeder cattle outright than I am owning feeders and feed while banking on rising fed cattle board for the reasons you describe about beef consumption.
If fats rebound, I may buy corn back at higher levels than what I sold while hedging these fat cattle... But I am ok with that risk as I am focused on feeding margin. I am trying to eliminate as many variables that could compound a loss on feeding cattle. If feed cost stay high, and fed cattle prices decline further, I would probably think about selling my calves back into the market
Right or wrong, this is how I am trying to reduce exposure to risk.
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back to basics-feeding cattle -protecting your bottom line
