futures up -steers down

[denoginnizer]

Can someone explain why feeder cattle futers prices keep going up but the prices at the stockyard are going down?

 

[bigbull338]

because the feedlots can still get cheap steers bought.

 

[dun]

Futures are just that. What are the futures on fat cattle?

 

[HerefordSire]

Good Question. Might make a man sell futures contracts and buy steers now to cover the contract and pocket the spread. :mrgreen: :mrgreen: :mrgreen:

 

[denoginnizer]

Good Question. Might make a man sell futures contracts and buy steers now to cover the contract and pocket the spread. :mrgreen: :mrgreen: :mrgreen:

Where to I have to deliver them?

 

[HerefordSire]

Good Question. Might make a man sell futures contracts and buy steers now to cover the contract and pocket the spread. :mrgreen: :mrgreen: :mrgreen:

Where to I have to deliver them?

I am thinking Kansas City. Each contract is about 40-50K pounds or about a truckload. You can navigate to the CME on the internet and find the contract specifications for feeder cattle.

 

[HerefordSire]

Good Question. Might make a man sell futures contracts and buy steers now to cover the contract and pocket the spread. :mrgreen: :mrgreen: :mrgreen:

Where to I have to deliver them?

I am thinking Kansas City. Each contract is about 40-50K pounds or about a truckload. You can navigate to the CME on the internet and find the contract specifications for feeder cattle.

I should add.....very few investors actually deliver cattle represented by contracts. If they are in the money or out of the money, they simply cover the position the contract represents.

 

[denoginnizer]

Feeder cattle futures for august delivery are 104.60.

 

[denoginnizer]

Cme exchange says that a load,50000lbs, must be grade 1 or 2 steers and weigh between 650 and 849 pounds

 

[HerefordSire]

So for every ten cents you can capture times 50,000 pounds is $5K gross profit or a tad less than 10% return in the amount of time it would take you.

 

[dun]

I should add.....very few investors actually deliver cattle represented by contracts. If they are in the money or out of the money, they simply cover the position the contract represents.

Not much different then Billy Solestes or Eddie Antar (Crazy Eddie)

 

[ga. prime]

I took a class on Futures Markets when I was in college back in the '70's. Each student was given $30,000 in play money to make trades with. I lost money on every trade I made. You really are at a disaadvantage playing those markets without inside information.

 

[denoginnizer]

loads of 800 pound grade 1 and 2 steers this week were 88.50. Herford shire given these numbers can you give me a scenario of my expected gain or loss ?

 

[kenny thomas]

620 steers weighing 835 sold here last week for 95.20. Could have gotten 97.00 this week.

 

[options]

denoginnizer

You can deliver anywhere, just know your what your basis is normally at where ever you want to sell. The reason you can deliver anywhere is because cattle CAN NOT be used to settle a feeder cattle contract. They don't want your cattle they only want your cash.

 

[options]

Herefordsire

If you own the underlying commodity used to cover the contract you have only paid margin calls or been paid margin calls. No profit will be realized above the original contract price. You may win on 1, but you lose on the other.
The only way they will realize profit as you describe will be thru speculating without owning the underlying commodity.
Advising these people to play the futures market is suicide for them. They might get lucky they might not. They just as well sell the cattle and go to the casino with the cash. We all know how stupid that is. CME has some great tools to insure profit for these farmers and ranchers but the futures market isn't one of them.

Herefordsire

You do realize that considering the question asked by denoginnizer, about cattle feeder futures going up, and the feeder cattle going down, and if that situation continues, that your advice about selling a feeder cattle futures contract and buying feeder cattle, you have now gotten your shorts cleaned twice?

 

[denoginnizer]

"Advising these people to play the futures market is suicide for them."

Almost sounds like someone is saying we are incapable of understanding the complexities of the future market. I dont know whether to be insulted or agree.

 

[options]

denoginnizer
CME provides several better choices for you to insure profit in your operation than future contracts do.

 

[denoginnizer]

Could you share some of them and perhaps elaborate?

 

[HerefordSire]

loads of 800 pound grade 1 and 2 steers this week were 88.50. Herford shire given these numbers can you give me a scenario of my expected gain or loss ?

If you sold first for 104.00 for example, and you bought for 88.50 for example, then your gross profit would be ((104 - 88.5) * Quantity * CWT) less contract premiums and delivery fees if any, minus any feed, board, insurance in between. You would be in a covered position.