You can’t control the cattle market. You can control your price.
Price protection for cow-calf, stocker and feedlot operations — built around your breakevens, your sale dates and your banker, by a broker who has worked the cattle markets since 1987.
Where your price risk sits depends on what you run.
Protect the calf check
Months before weaning, you can set a floor under next fall’s calves with feeder cattle puts — and still get paid if the market rallies.
Lock the spread on grass
Buy light cattle and price the heavier sale at the same time, so a summer of gain isn’t wiped out by a fall price break.
Manage the whole margin
Feeder cattle in, corn through, fed cattle out. We look at all three legs — placements to closeout — not just the sale side.
Three ways to set a price
Most operations end up using more than one. The right mix depends on your size, your cash flow and how much upside you want to keep.
| Futures hedge | Put options | LRP insurance | |
|---|---|---|---|
| What it does | Locks in a price level | Sets a floor, keeps upside | Sets a floor through USDA-backed insurance |
| Upfront cost | Margin deposit | Premium paid | Subsidized premium |
| Margin calls | Yes, if the market rallies | No, for option buyers | No |
| Size | Feeder: 50,000 lb · Live: 40,000 lb per contract | Same as futures | Any number of head, within program limits |
| Flexibility | Can lift or roll anytime | Can sell back anytime | Set at purchase; bought through an insurance agent |
How a cattle hedge comes together
- 01Know your breakevenPurchase cost, cost of gain, death loss and interest. Use the calculator.
- 02Match your sale windowPick the contract month closest to when the cattle will actually sell.
- 03Set the protectionFutures, puts or a combination, sized to the head you’ll market.
- 04Sell cash, lift the hedgeWhen the cattle sell, the hedge comes off. Basis decides the final net price.
Questions ranchers ask
Should I use LRP or futures?
It depends. LRP has no margin calls and works for smaller groups of cattle, but it can’t be adjusted once bought and doesn’t cover feed. Futures and options can be changed as the year unfolds. Many operations use both.
How many head do I need to hedge?
One feeder cattle contract covers 50,000 lb — roughly a load of 750-lb steers. One live cattle contract covers 40,000 lb. If you run fewer, options on part of the herd or LRP may fit better.
What happens if the market goes up after I hedge?
With futures, you’ll lose on the hedge and gain on the cattle — and you may get a margin call along the way. With puts, you only lose the premium you paid and keep the higher cash price.
What is basis, and why does it matter?
Basis is the difference between your local cash price and the futures price. A hedge protects the futures part; knowing your usual basis tells you what the hedge really locks in.
Will you work with my lender?
Yes. Many lenders like to see a written marketing plan, and Henry is happy to walk your banker through it.