Long Mar. '15 Feeder Spread 4-2-8

[stoic]

I'm amazed as well, my data goes back to 1975 and this is unprecedented. As for the Feeder Spread the assumption is still for an average wt gain of 500 lbs. per head. Of all the auctions I attended this last summer and fall, the lower the weight of the feeders at auction the higher the positive basis. Example: At auction 8/13/14, 20 Medium heifers with an avg. wt. of only 390 lbs. sold @ 370.000 cwt. Another lot of 19 heifers med-to-lrg-frame avg. wt of 898 lbs. sold @ 197.500 cwt. At that time the futures quote for feeder @ the auction was @ 214.475. I did get the impression from the producers that very little stock is being held back for future breeding due to the record high in the feeders. Since 98% of feedlots utilize futures to hedge their operations (according to the USDA) I can only speculate that the feedlots are not yet feeling the full pinch of the negative GFM for future delivery. I did note that out of all the feedlots visited, on average are running @ about 70% of capacity. Something's got to break!

 

[FCXoptions]

Basic Cattle Feed Rations utilized by feedlot include:

No. 2 Corn, Ear Corn, Corn Silage, Alfalfa, and protein supplements.

On my last trip out, in July & August this year, was the first time feedlot operators mentioned Distillers Grains with all reporting positive results.

I have a buddy that worked in logistics through mid summer at a grain company here in TN, he said the amount of distiller grains they were moving was insane. He said they were really getting put to use.

I am clearly very late to respond, but just saw your post on the grain.

 

[TraDaToR]

From a technical point of view, it seems the bottom is in. If you had to choose an expiry to go long the Cattle feeding spread, what would it be? I like the Mar/May/Aug one but there is perhaps a better option fundamentally...