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<blockquote data-quote="js1234" data-source="post: 1217145" data-attributes="member: 17596"><p>virtually every major feedlot in the west and midwest does some amount of custom feeding for investors. a typical equity position is $300-$350 per head with the balance of the cattle cost and 100% of the feed costs and margin calls financed at currently 4-4.5%. they also can handle the risk management in house. the key to this is risk management. often times in the market place there are risk management opportunities that allow a producer to in many instances protect break-evens or lock in profits at some point over the course of owning that set of cattle. Feeding cattle is extremely risky and not for the faint of heart. for this reason, the default response by most people many of whom really don't know the first thing about feeding cattle is that you'll never make money. the money is always, always, always made on the buy side. you are in the perfect spot, you don't have a brick and mortar feedyard or kill plant that you have to feed. run your break-evens, if the cattle can be bought at a break-even or slight profit after figuring the cost of getting a put option underneath them, why not protect your downside and try a set on to see how things really work? I'm certainly not what i would consider a cattle feeding expert but we do feed what i think most would consider quite a lot of cattle annually at several yards. there are a few things i can tell you with certainty:</p><p>1. some of the cattle i have on feed right now will lose money, you will own cattle at some point that lose money too.</p><p>2. there have been years (not near as many as the horror stories) that the net return for feeding cattle was a loss.</p><p>3. we, like you, do not happen to own a feedlot (other than a small grow yard for warming up grass cattle),we don't "have" to feed cattle. the only reason that we do is that year over year, by buying cattle right or not at all and managing the futures aggressively, we make money feeding cattle.</p></blockquote><p></p>
[QUOTE="js1234, post: 1217145, member: 17596"] virtually every major feedlot in the west and midwest does some amount of custom feeding for investors. a typical equity position is $300-$350 per head with the balance of the cattle cost and 100% of the feed costs and margin calls financed at currently 4-4.5%. they also can handle the risk management in house. the key to this is risk management. often times in the market place there are risk management opportunities that allow a producer to in many instances protect break-evens or lock in profits at some point over the course of owning that set of cattle. Feeding cattle is extremely risky and not for the faint of heart. for this reason, the default response by most people many of whom really don't know the first thing about feeding cattle is that you'll never make money. the money is always, always, always made on the buy side. you are in the perfect spot, you don't have a brick and mortar feedyard or kill plant that you have to feed. run your break-evens, if the cattle can be bought at a break-even or slight profit after figuring the cost of getting a put option underneath them, why not protect your downside and try a set on to see how things really work? I'm certainly not what i would consider a cattle feeding expert but we do feed what i think most would consider quite a lot of cattle annually at several yards. there are a few things i can tell you with certainty: 1. some of the cattle i have on feed right now will lose money, you will own cattle at some point that lose money too. 2. there have been years (not near as many as the horror stories) that the net return for feeding cattle was a loss. 3. we, like you, do not happen to own a feedlot (other than a small grow yard for warming up grass cattle),we don't "have" to feed cattle. the only reason that we do is that year over year, by buying cattle right or not at all and managing the futures aggressively, we make money feeding cattle. [/QUOTE]
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