40 NEBRASKA CATTLEMAN August 2025 A family owned and operated Commercial Feedlot located in the heart of Nebraska’s Corn Production. OUR ATTENTION TO DETAIL MAXIMIZES YOUR PROFIT POTENTIAL! DFI also offers: Risk Management • Partnership Feeding Multiple Marketing Options Retained Ownership • Feeder Financing Private Consulting Nutritionist Private Consulting Veterinarian Location Close to All Major Packers Permanent Shades in Pens Two Locations: Columbus & Palmer • 13,500 head capacity Mike Drinnin, Owner/Manager • miked@drinninfeedlots.com Office: (402) 564-7409 • sharib@drinninfeedlots.com drinninfeedlots.com Jarad Drinnin - Columbus Cell: (402) 910-6508 Sam Drinnin - Palmer Cell: (402) 910-0233 PEERS CONTINUED ON PAGE 44 WHERE WILL YOU STAND WHEN THE CYCLE TURNS? WHY NOW IS THE TIME TO THINK ABOUT PRICE PROTECTION ALEX GERDES | DIRECTOR OF RISK MANAGEMENT & CATTLE PROCUREMENT, BALANCE4WARD Will this market ever stop climbing? Will the cow herd rebuild? Will demand soften? These are the questions on producers’ minds as record-high cattle prices continue to dominate the headlines. From the bull’s point of view, the case for continued strength is compelling: • We have witnessed years of aggressive cow liquidation and astronomical cull cow prices amid minimal cow herd rebuilding. • U.S. consumers have demanded beef in a monumental fashion, driving up boxed and retail beef prices. • The bull trend of the market has sustained for 5 years, continuously outperforming research/analyst estimates and expectations. It’s a “perfect storm” the industry rarely sees, fueling optimism and profitability. But anyone who’s been in the cattle business long enough knows these moments don’t last forever. HISTORY HAS A WAY OF REPEATING ITSELF In past cattle cycles, a strong bull run has often been followed by a 25 to 45 percent correction in the cash market. If that pattern holds true, today’s high feeder prices could leave cattle feeders dangerously exposed when the fed market turns lower. So, the question becomes: Where will you stand when this market cycle rolls over? Historically through the downturns, those who survive and even thrive are the ones who prepare. That means having a price protection strategy in place. KNOW YOUR TOOLS There’s no one-size-fits-all answer. But there are proven tools available to help manage downside risk. At Balance4ward, we refer to this as your Risk Management Toolbox: • Selling Futures • Buying Put Options • Livestock Risk Protection (LRP) • Packer Contracts Each tool has pros and cons. The key is to match the right tool with the unique needs of your operation. Here’s a framework to help guide your decisions: 1. UNDERSTAND YOUR BASIS Basis – the difference between cash and futures – plays a critical role in your strategy: • Positive Basis (Cash > Futures): More common in late spring through early summer in Nebraska. • Negative Basis (Cash < Futures): Often seen from fall into winter. Strategy Suggestions • Positive Basis: Lean toward selling futures or buying puts to preserve basis strength.
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