LAA my puts strike price date is after Thanksgiving. I felt that the price drop was going to be later this year and bought a contract to reflect that. So I may not make anything on them if the market goes back up.
As for who the live contracts are with. They are not directly with any packer. There are several regional buyers that supply a couple of different store chains and restaurant chains. The contract spells out what the cash price is per LBS. Then there is a premium for dress percentage, loin eye size and fat layer thickness. So the actual premium is paid after slaughter. We can actually get docked if the dress percentage is not good enough. The loin eye size and fat thickness are all positive payment only. These contracts are also beef breed specific too, so no dairy breeds. We do not know where the cattle will be slaughtered until they load the cattle out. They contract the kill with different packers.
Two of these buyers are relatively new to me in that they have only been around 4-5 years. The other one has been around 15-20 years. All of them have a specific end user. One of these actually wants lighter cattle as they pay better for a thinner fat layer.
Your correct on your description of direct packer contracts. They are not competitive around here for me. I can usually beat or equal them at the local sale barn as far as price goes.
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