Document Type

Other

Publication Date

1-1-2011

Keywords

livestock marketing, livestock management, calf prices

Extension Number

ExEx 5055

Department

Economics

Description

Producers in South Dakota market a high propor¬tion of the state’s calf crop shortly after weaning. Generally, the largest volume of sales occurs during October and November ,with the calves commonly weighing 500–600 lb. This publication provides sug¬gestions for producers who will be selling calves on how to capture the relatively high prices currently available. Potential hedgers can become aware of forward prices available, especially given the increase in such activity in recent years. There are trade-offs when using the strategies presented. Basis is a consider-ation, and basis risk is quite large when cross-hedging stockers against feeder cattle futures or options con¬tracts. The drawbacks, however, may be acceptable if producers can capture a very profitable calf price. Because multiple tools are available with the current price levels, a producer can also diversify by using more than one strategy.

Comments

Updated January 2011.

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