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nw oh | If you are buying puts for insurance and leaving the topside open you eventually have to take a stance and sell the cattle right? Are you just holding the put till they are finished and sell on the fat market or eventually take a stance and sell packer contract?
The thing that bothers me with the put strategy is you bought the insurance watch the market run do nothing because you have a floor only to have it come back to where you started when you bought put at market talk. The insurance gave you a warm fuzzy feeling to do nothing as far as setting a selling price.
Now my 2 cents and it is worth much less than that. I agree with everyone staying consistent. I have been a long time user of packer contracts they are simple for me to understand with no margin obligations. After buying calves will typically wait 4-6 weeks to make sure health is ok and then sell 1/3 to 1/2 assuming margin is sufficient. Will then wait a few more weeks if market is climbing and then sell the rest. Spend the last year (buy small Holsteins) that we own them concentrating on health, comfort and feed.
It has been kind of a downer seeing daily cash price far above contracted price for last 6 months but was on the other side of coin for many years. I am reevaluating what my margin needs to be with handling larger amounts of money. I feel I am in the margin business and if I do not sell the cattle I am just speculating.
These are my thoughts have enjoyed reading everyone else's strategy's. | |
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Puts and Cattle Marketing ? and my 2 cents
