ABSTRACT
Management remains the key to a successful and profitable cattle on feedlot operation. Most larger cattle feeding operations have some kind of risk-management program or policy, which may be well defined or it may have just developed. Risk management for a cattle feeder, a commercial feedlot, or a cattle manager should be designed to preserve equity capital and to strive for reasonable profits. A good, relatively simple, technical system is important for a good risk manager. Local packer contracts in 1982 and 1983 offered a forward finished-cattle contract that specified the percentage choice and general weight range required. Price charts should be kept or subscribed to for observation to see where price is in relation to historical highs or lows and general trends. Cattle performance, health, weather, and feed-yard management, and "basis" are just a few unknowns that change break-even points. Three possible hedging policies are outlined here representing a conservative, moderate, and liberal approach to price protection.
