Hedge signal from Feeder and Live Cattle futures?

[TechAnalyst]

One should never be the bearer of bad news but...

Daily feeder and live cattle futures charts have given sell signals suggesting a short term (to begin with) setback could be seen.

March Feeder futures have an initial target of $132 or $13/cwt below current levels (US).

Live Cattle futures suggest a dip to $113 or $10/cwt US below current levels could be seen.

This is for those inclined to use futures or put options to hedge their risk.

[farming101]

I'd like a second opinion

[TechAnalyst]

It looks like the market provided the second opinion.

Nothing like a limit higher move to start the month to demonstrate the buying interest and potentially negate the sell signals.

I would normally lift the hedge but given the sharp reversal lower this week in equity markets and the cattle markets history of following breaks in stocks, it may be worth being patient to make sure the correction in equities doesn't turn into something more serious.

[farming101]

2600 US underwater/contract in GFH after 2 days would indicate a better entry point would be a consideration
I do think the upside is limited

[TechAnalyst]

A hedge indicates the cash cattle would be worth $2600 more as well to offset the futures loss.

If you were concerned about missing out on the upside, you would have used put options.

In that case, the cash cattle would have gained much more than the puts would have lost in value. And you would still have the price insurance in case the equity setback turns into something more serious.

[helmsdale]

What's this? A marketing thread on a marketing forum? What's this place turning into? 😲

[farming101]

Is money flowing in or out of livestock? Bullish or Bearish?

https://www.manitobacooperator.ca/daily/u-s-livestock-funds-weather-extend-cme-live-cattle-gains https://www.manitobacooperator.ca/daily/u-s-livestock-funds-weather-extend-cme-live-cattle-gains

Quote from the linked article:

Some funds that exited Friday’s stock market collapse may have landed in live cattle futures because of their upward momentum, said traders and analysts.

“It does look like there’s some new money flowing into the cattle market. It looks like maybe some are coming out of the stock market,” said Midwest Marketing Solutions analyst Brian Hoops.

[Oliver88]

Which futures contract and put options contracts are the ones used for cattle?

[errolanderson]

Which futures contract and put options contracts are the ones used for cattle?

Oliver, both love and feeder cattle are used. But feeder cattle may show more volatility than live. This increased volatilty can favor option buyers whether for puts or calls.

An opinion, but if stock markets continue to plunge next week, it won't be long before the cattle board is impacted.

[farming101]

There are two. Live Cattle and Feeder Cattle. Both at the CMExchange.

April is the front month now for Live Cattle, the more heavily used of the two. Contract months:Feb, Apr, Jun, Aug, Oct, Dec

March is the front month for Feeders, contract months:Jan, Mar, Apr, May, Aug, Sep, Oct, Nov