Undoubtedly, the most difficult decisions facing the cattle producer are those concerning the price he is willing to pay for feeder cattle and corn, and the price at which he is willing to sell his fed-cattle. Far too often, these decisions are based on short-term changes in psychology or the opinion of someone oblivious to the producers profit expectations and tolerance for loss. In most cases, the most damaging losses occur when producers have focused solely on the price of their product without recognizing the potential for margin erosion. With little or no plan for stopping losses, large declines in equity occur in depressed markets. When losses become too severe to continue without some form of insurance, hedges are placed, often locking in losses on production with a greater potential for a profitable cattle feeding experience.
Frontier’s Total Risk Management Program (TRuMP) was designed to assist producers with their risk management needs. It focuses on constant risk measurement of the total position, both cash and futures. This allows for more conscientious planning and decision making, especially during periods of increased volatility. It also aids in the selection of hedge positions that more closely fit the producer’s risk tolerance level or allow for increasing returns in advancing markets. TRuMP is not a "black box" trading system. It neither chooses to be long or short nor how large of a position to hold. In fact, without interpretation and direction from the cattle feeder, its information is virtually useless. TRuMP is a program designed to assist in the decision making process. By monitoring the total position, it keeps
the producer abreast of his risk in all market environments. Historical analysis provides feedback to help improve projections and decision making for the future. It’s a yard sheet for your P&L. Contact us to learn more about TRuMP: Call us toll free at 1-877-268-4800 or Email Hank Rogers at hankr@frontier-risk.com or Robert Johnson at robj@frontier-risk.com