Live Cattle Futures and Options: How Have They Done?

Futures did reduce price risk. Hedging produced a higher minimum return and higher return at the 25th percentile (75% of the returns are better than this figure) than did the cash market. The 50th percentile, or median return, was higher for yearlings in the cash market than hedged cattle, and the calves had mixed results. Although the differences are not great, there have been months when the option strategies performed better than cash or futures, (i.e., January–April and September–October), and there are months when they did not fare well (i.e., June–August).

Estimating the Value of Source Verification in Iowa Feeder Cattle Markets

Source verification and pooling of feeder cattle into larger lots resulted in higher selling prices compared to more typical sales at a southern Iowa auction market. After higher prices due to larger lot sizes were accounted for, cattle that received a specified management program and were source verified as to origin received additional price premiums. The data do not distinguish between the value of the specific management program and the value of the source verification process. However, cow–calf producers participating in the program took home more money.

Profiting from the Cattle Cycle: Alternative Cow Herd Investment Strategies

Beef cow herd owners can benefit from incorporating price signals into their heifer retention decisions. Whereas a perfect forecast of calf prices over the productive life of the heifer added to the herd would be ideal, such information is not available. However, simple decision rules that incorporate current or recent prices and the knowledge that the cattle cycle likely will repeat itself can help producers improve their investment decisions. A dollar cost averaging strategy that retains the same dollar value of heifers each year and a rolling average value strategy that retains a 10-year average value of heifers out performed strategies that sought to maintain a constant herd size or a constant cash flow.

Estimating the Value of Source Verification in Iowa Feeder Cattle Markets

Source verification and pooling of feeder cattle into larger lots resulted in higher selling prices compared with more typical sales at a southern Iowa auction market. After accounting for higher prices due to larger lot sizes, cattle that received a specified management program and were source verified as to origin received additional price premiums. The data do not distinguish between the value of the specific management program and the value of the source verification process. However, cow-calf producers participating in the program took home more money.