Walsh Cattle Opportunities - Pure Hedge Division
Cattle futures continue to show extreme strength. August feeder cattle hit all-time highs on Wednesday at $345.35, while August fat cattle made its own record high at $236.30. The average cash cattle trade hit a record on Monday at $243.17. Boxed beef prices also continue to grind higher with Choice-grade cutout up +4.04 to 373.98 and Select up +4.87 to 350.81 on Wednesday. The Cattle Inventory Report on July 25, estimated cattle inventories as of July 1, at 94.2 million head, down 1% from July 1, 2023. The Cattle Inventory Report showed the lowest herd size in history. July’s Cattle on Feed showed little evidence of heifer retention. The border with Mexico is still closed for imports of Mexican cattle, due to screwworm concerns. In addition, the US imposed a 50% tariff on Brazilian beef exports starting August 1. There has been no slowdown in retail demand despite the climbing boxed beef prices.
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Seasonally cattle tend to trade lower from September to December. Retail demand could slow down as the grilling season comes to an end, however this year prices have been moving counter-seasonally. Cattle futures are roughly 80% correlated with the stock market, which has been performing well, with the S&P making new all-time highs. If there’s a sizeable pullback in the stock market cattle could also move lower.
I’ve included some bearish strategies to take advantage of a crash in cattle prices. When the cattle prices do move lower it could be a $50-$100 move and happen quickly. Feeder cattle will very likely lead the way down. In the meantime, I would recommend buying cattle futures, with a stop, to take advantage of the strong upward trend. Being long cattle has worked out very well for my customers lately. You can also use any gains in the futures to finance puts.
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Feeder Cattle
Buy 1 September’25 307 Put 0.87 ½
Price: 0.87 ½ Cost: $475.00/Trade Package, Plus Fees and Commissions
September’25 Feeder Cattle Options Expire 9/25/25 (50 Days)
MAXIMUM LOSS: LIMITED
Buy 1 October’25 306 Put 2.27 ½
Price: 2.17 1/2
Cost: $1,087.50/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Options Expire 10/30/25 (85 Days)
MAXIMUM LOSS: LIMITED
Buy 1 November’25 304 Put 3.15
Price: 3.10
Cost: $1,550/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Options Expire 11/20/25 (106 Days)
MAXIMUM LOSS: LIMITED
Buy 1 September’25 320 Put 1.87 1/2
Sell 1 September’25 300 Put 0.60
Price: 1.27 1/2
Cost: $637.50/Trade Package, Plus Fees and Commissions
September’25 Feeder Cattle Options Expire 9/25/25 (50 Days)
MAXIMUM LOSS: LIMITED
POTENTIAL GAIN: $10,000.00/TRADE PACKAGE
Buy 1 October’25 320 Put 4.05
Sell 1 October’25 310 Put 2 1/2
Price: 1.55 Cost: $775/Trade Package, Plus Fees and Commissions
October’25 Feeder Cattle Options Expire 10/30/25 (85 Days)
MAXIMUM LOSS: LIMITED
POTENTIAL GAIN: $5,000.00/TRADE PACKAGE
Buy 1 November’25 330 Put 8.85
Sell 1 November’25 310 Put 3.75
Price: 5.10
Cost: $2,550/Trade Package, Plus Fees and Commissions
November’25 Feeder Cattle Options Expire 11/20/25 (106 Days)
MAXIMUM LOSS: LIMITED
POTENTIAL GAIN: $10,000.00/TRADE PACKAGE
Live Cattle
Buy 1 December’25 235 Call 7.52 1/2
Buy 1 December’25 205 Put 2.35
Price: 9.87 1/2
Cost: $3,950/Trade Package, Plus Fees and Commissions
December’25 Live Cattle Options Expire 12/5/25 (135 Days)
MAXIMUM LOSS: LIMITED – CAN ONLY LOSE PREMIUM PAID – ZERO MARGIN RISK
Buy 1 October’25 208 Put 1.15
Price: 1.15 Cost: $460/Trade Package, Plus Fees and Commissions
October’25 Live Cattle Options Expire 10/3/25 (58 Days)
MAXIMUM LOSS: LIMITED
Buy 1 December’25 208 Put 2.72 1/2
Price: 2.72 1/2 Cost: $1,090/Trade Package, Plus Fees and Commissions
October’25 Live Cattle Options Expire 10/3/25 (58 Days)
MAXIMUM LOSS: LIMITED
Buy 1 October’25 220 Put 3.20
Sell 1 October’25 205 Put 0.92 1/2
Price: 2.27 1/2 Cost: $910/Trade Package, Plus Fees and Commissions
October’25 Live Cattle Options Expire 10/3/25 (58 Days)
MAXIMUM LOSS: LIMITED
POTENTIAL GAIN: $6,000.00/TRADE PACKAGE
Buy 1 October’25 215 Put 2.10
Sell 1 October’25 205 Put 0.92 1/2
Price: 1.17 1/2
Cost: $470/Trade Package, Plus Fees and Commissions
October’25 Live Cattle Options Expire 10/3/25 (58 Days)
MAXIMUM LOSS: LIMITED
POTENTIAL GAIN: $4,000.00/TRADE PACKAGE
If you’re ready to start trading, click the link below to open an account with Walsh Trading, Inc.
Hans Schmit, Walsh Trading
Direct 312-765-7311 Toll Free 800-993-5449
hschmit@walshtrading.com www.walshtrading.com
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