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Seize the opportunity in market volatility

Ag Marketing IQ: You can protect record prices in the cattle market.

Brady Huck

February 6, 2024

3 Min Read
Angus cattle in pasture
Getty Images/iStockPhoto

What a great time to be in the cattle business! The feeder cattle index lifetime-high trade is $254.10 and currently you can protect nearly a $20 premium to that for next fall.

If you didn’t hit the market high with your calf crop last year, you can protect that record price and leave the opportunity open for the better, right now.

The supply story is well documented. The market knows it will take time to rebuild the beef cowherd and you can see premiums built into deferred contracts for this very reason. There are record prices today, but the best may still be yet to come.

How good will prices get and how long will they last? These are the two biggest questions in front of the cow-calf and backgrounder today.

What goes down also comes up

Nobody knows the answer to these questions nor how the year ahead will play out. No doubt the election, politics, outside markets, and a growing list of global dynamics will influence your cattle market, Unfortunately, we will not have advance notice on the how or when. 

Two months ago, we saw a massive meltdown in both feeder and live cattle markets. January Feeder Cattle sold off $59, which equates to roughly $470 per 800-pound steer. Live cattle sold off $34, or about $475 per 1400-pound fat steer. This is a more recent reminder of how quickly and unexpectedly markets can move, and in this case, go against you.

Looking back a year $200 feeders looked pretty sweet. Then they went to $220, $240, and $260-plus on the board.

Protect your equity

We have real equity and real dollars to protect. You need a plan or a marketing strategy that enables you to protect more dollars if the market keeps going up. What is your plan to capture and protect that equity? 

If you embraced our philosophy of managing positions at target efficiency levels, you were able to protect those additional dollars and very thankful you did when the market sold off. A plan such as this may be exactly what your operation needs.

In life and in marketing, we do not know what we do not know.

Use the available tools

As farmers, ranchers and brokers, we all have access to the same tools, yet how we use the tools can be vastly different across brokerage firms. There has never been a better time to learn how the available tools and marketing strategies can help you protect record prices today. One of the products we have found success with is Livestock Risk Protection. LRP and how you can manage it after you have it in place is one way to take control of your livestock and grain marketing.

At the risk of being repetitive, this is a good time to learn how to manage and embrace market volatility, enabling you to make the most out of market opportunities that could lie ahead. A broker or brokerage firm can help you with this. Regardless of the firm you choose, contact a trusted advisor today and make a plan to lock in record prices.

Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.

Information provided may include opinions of the author and is subject to the following disclosures:

The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

About the Author(s)

Brady Huck

Risk advisor, Advance Trading, Inc.

A Dodge City native, Brady joined Advance Trading in 2017.  After graduating from Kansas State University, he spent the first four years of his career as a crop scout and advisor, assisting dryland and irrigated farmers with production decisions. Prior to joining ATI, Brady led a specialty corn project in western Kansas, working with both producers and end-users.  At home, he enjoys spending time with his growing family, raising Angus cattle, coaching kids wrestling, and an occasional round of golf.

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