Cattle buyers....

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eric

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I was watching an auction the other day on RFD TV....and my wife and I couldnt figure out who was buying these cattle. Example: Lot # 46....

492 hd @ base weight of 650 lbs. ....sold for $89.25

So, $89.25 x 6.5=$580.13 / head (right so far?)

$580.13 x 492 hd = $285,423.96!!!! (correct?)

Am I figuring this out right?

Who has $285,000 to buy cattle? Is it the meat companies buying these cattle, or can a big time rancher go to a lender and get the money?

Besides Dun, who else has $300k laying around?
 

D.R. Cattle

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Cattle are sold like this every day. It's a regular thing. Packers, feedlots and preconditioners are buying them. When cattle are sold through our sale barn, they regularly roll 3,000 head through. The same groups are buying them too.
 
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eric

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That brings up another question I have about sale barns...all catttle at the barn sell, no matter what, correct? Who buys the scraggly looking cows, does the salebarn have a contract with the packers at a certain price? If I am not mistaken, I have seen cows go through the ring where nobody bids on them.
 
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Anonymous

Eric -- sometimes it's just buying for individuals or small partnerships that are well funded and that are fairly major players. I've got one individual client that tries to keep about 3,500 calves on feed year around. He feeds at a feedyard way down in Starr county near the Texas-Mexico border. It's common for him to put up 30% of the price of the calves as equity and the banks will loan the 70% balance plus the feed costs until closeout. But obviously to do things on this scale you need to have substantial net worth and need to understand the risk/reward relationships, hedging, etc. I'll guarantee one thing though --- people feeding way down there in Starr county, that sold a high portion of the calves to the Mexican market, obviously were none too pleased with the BSE problem and Mexico cutting off US imports! Arnold Ziffle
 
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Anonymous

Like the saying there is a buyer for everything if you find them. I've read about the single largest cattle transaction. Wish I could remember something like 20,000 head. Couple times I've went to the auction and bought only the sick ones, takes a lot of time but it can be a quick return.
 

Craig-TX

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eric":82q5pepx said:
That brings up another question I have about sale barns...all catttle at the barn sell, no matter what, correct? Who buys the scraggly looking cows, does the salebarn have a contract with the packers at a certain price? If I am not mistaken, I have seen cows go through the ring where nobody bids on them.

They are going to the slaughter houses. Either the packer will have an agent there or somebody will buy them, haul them to the packer and sell them – hopefully at a profit.

If nobody bids the salebarn owner buys the animal at the price he started bidding. That’s one of the things that keep salebarns honest. He’s got to know the market that week and not start bidding too low (he will look stupid) but not too high (he will own it). He makes his money by getting producers to bring their product to him. He has an interest in getting them full market price. He also wants all the buyers to show up. The way to get them to come every week is to have plenty of quality stock. So it all builds upon itself. It’s a classic example of the free market at work.

Craig-TX
 

BLACKPOWER

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eric said:
I was watching an auction the other day on RFD TV....and my wife and I couldnt figure out who was buying these cattle. Example: Lot # 46....

492 hd @ base weight of 650 lbs. ....sold for $89.25

So, $89.25 x 6.5=$580.13 / head (right so far?)

$580.13 x 492 hd = $285,423.96!!!! (correct?)

Am I figuring this out right?

Who has $285,000 to buy cattle? Is it the meat companies buying these cattle, or can a big time rancher go to a lender and get the money?
He doesn't neccesarily have the money, what he does have is the loan. Big difference. We routinely drop over $100,000 dollars on stock some years. You have to look at it as an investment. The man I sold my calves to this year owns several feed lots the one my calves went to has over 80,000 head in it. Take 80,000 x $585 = 4,680,000 and thats only in one feedlot. It's a high stakes game but when your playing with these numbers your hedged to the hilt to survive the "surprises".
 

skip

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Boy, was I suprised when I saw the same program. I told my wife some guy just spent a lot of money as fast as she does when she goes to the ladies clothing store.
 

Jake

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are you sure Dun... I though you might be that long lost rich great uncle that you always hear people talk about finding
 

dun

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I'm still trying to find him myself

dun


Jake":3o4xskek said:
are you sure Dun... I though you might be that long lost rich great uncle that you always hear people talk about finding
 
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