Buying Calves

[Cattleman]

Cotton, if you have issues with the things I said, you should think about what you have written! That said, I had issues with some of your comments, but I said I did see value in your posts/insights. In terms of basis in the cattle market, it is way more dynamic than the grain markets, and lots of guys miss that in my opinion. Cattle movements month to month are almost like moving from crop year to crop year in some ways.

In terms of funds not caring about cattle on feed, that is my point exactly, and why these basis levels are out of whack. Funds think cattle supplies are shrinking, they send the markets up, so feeders place more cattle on feed in response to the prices, plus the drought in Texas has these basis extra weak. Cattle basis levels and trends are huge IMO. Then when these cattle comes to market the futures come to the cash, as the prices are unrealistic given actual supplies, and people get nailed. Just like they are in the US right now.

Yes I was annoyed, and still don't think it is one simple blanket marketing decision/strategy for everyone at all times!

I am curious about your options statement, I toil with that one too...but not sure I am that convinced?

Anyway, as I have said, I think the macro economic conditions are very interesting and becoming a bigger driver. Looking forward to those discussions.

[charliep]

Options are a tool. Are a cost but have to think about like insurance. Can't take the downside risk but wanting to keep the upside open - you have to pay a premium. Anyone who thinks options are licence to print money should be selling/writing them. There are good risk management strategies around writing options - always a question of what a manager wants to accomplish.

Cattleman - Don't know if you in Alberta but what is you view of CPIP? Cattle Price Insurance Program.

[wilagro]

My opinion: CPIP has got to be one of the dumbest programs going. It assures that the 'packer' IS in control and can offer lower bids on all cattle without too much squawking from the producer. After all..."the producer now has insurance" against drastic loss.

It is all BULL droppings.

There is a cost for this "protection" and IMHO it comes out of the profit pie.

[Cattleman]

Yeah, I think selling options can work in my risk management. Options are pricy to get into a valuable spot... I look at options sometimes with corn, but more on spec it seems Nice not to have margin calls.
CPIP makes sense. Fed cattle is hit and miss, and works sometimes. The others are a little less appealing, mainly since we have had such a tightening of the basis, the program does not give as much protection as it should in my opinion.

[cottonpicken]

80% of options expire worthless.

If your looking to hedge and risk manage and play it
safe my feeling is you put that money into
something like a solid dividend paying oil company.

Fuel is a cost we all have and over the course of
time at some point your dividends will be a good
chunk of your fuel bill,and you always end up with
something of value.

If your like me and love the risk game,there are
different scenarios of what you could do with that
money but i'm not going to get into that.

NIA DYODD

[BTOfarmallll]

Dr. Joe Dales, DR. JOE DALES!!!!!! How did cotton bring up posts from 2008???? Where's The Search Button????? TIA