Fats vs. Feeder Cattle

[TraDaToR]

Thanks for the link to the PDF.

I used CME credit ratios to choose the 3:2 one: http://www.cmegroup.com/clearing/margins/inters.html#e=CME&a=AGRICULTURE&p=FC.

It is true that this spread was ill conceived considering the expiries I chose. I later read the the CME pdf and discovered a more proper way to trade cattle feeding spreads.

Anyway, I didn't check but I don't think any other ratio or expiry choice would have transformed it into a winning trade. This strength of feeders relative to cattle was just counterseasonal.

 

[emg]

Quote from TraDaToR:

Entered today a Short May feeders/long June Cattle @ 20.275. I expect to hold it for 6 months approximately.

2 months the most

 

[emg]

http://www.ksre.ksu.edu/

best site to learn more about cattles. But, higher education will master u in trading the cattles and grain spread

 

[emg]

Quote from TraDaToR:

Entered today a Short May feeders/long June Cattle @ 20.275. I expect to hold it for 6 months approximately.

Why are you watching Jan/ Apr or Mar/June? Does the Three months corresponds to the time spent in feedlots before slaughter? I am learning here.

Thanks.

well you take a 750-pound critter. he gains 3.5 pounds/day on average. make him weigh 1300 lbs.
so that animal would be on feed 60-120-150 days roughly. depend on the weather.
1/2/4 1 corn + 2 FC = 4 LC in a crush
2/4/8
1/2/4
CZ+FCQ=LCZ or LCG probably die in January most likely a lot of cattle are gaining 4+ pounds per day. better breeding over the years

 

[TraDaToR]

CME website says 5-2-4 :http://www.cmegroup.com/clearing/margins/inters.html#e=CME&a=AGRICULTURE&p=FC, but the ratios on the website usually makes no sense. Perhaps they are talking about 5 mini-corns???

Anyway, yours makes a lot more sense. Another CME pdf was talking about 1-1-2.

 

[etemtezcan]

I bought a 3 LC V2 / 2 FC K2 spread and broker charged me 3600 usd margin.
Outright FC margin is 2025 usd and LC margin as 1620.
This corresponds to nearly 60% margin credit.