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<blockquote data-quote="Texas PaPaw" data-source="post: 440139" data-attributes="member: 2905"><p>jr</p><p></p><p>The main reason most calf & feeder prices are in decline is we are entering fall, which is when the majority of cow calf operators wean and sell their calf crop. This causes an increase in supply at the same time as grass growth and grazing is running out. Historically, fall is a time of increased supply and decreased demand for the reasons mentioned.</p><p></p><p></p><p></p><p>Futures prices do not predict the cash price in the future. Futures are merely a process for locking in a future buy or sell price today. If April 08 feeders are trading at $1.15 this means that the seller believes that feeders will be worth less than $1.15 in April and the buyer believes they will be worth more than $1.15 in April. Futures can be an effective risk management tool if used appropriately, but they are not an accurate predictor of prices.</p><p></p><p>A good book that explains the business and financial side of the cattle business is "Knowledge Rich Ranching". You can order it at the following link:</p><p></p><p><a href="http://www.stockmangrassfarmer.net/cgi-bin/page.cgi?id=362.html" target="_blank">http://www.stockmangrassfarmer.net/cgi- ... d=362.html</a></p><p></p><p>Just my 2 cents worth.</p></blockquote><p></p>
[QUOTE="Texas PaPaw, post: 440139, member: 2905"] jr The main reason most calf & feeder prices are in decline is we are entering fall, which is when the majority of cow calf operators wean and sell their calf crop. This causes an increase in supply at the same time as grass growth and grazing is running out. Historically, fall is a time of increased supply and decreased demand for the reasons mentioned. Futures prices do not predict the cash price in the future. Futures are merely a process for locking in a future buy or sell price today. If April 08 feeders are trading at $1.15 this means that the seller believes that feeders will be worth less than $1.15 in April and the buyer believes they will be worth more than $1.15 in April. Futures can be an effective risk management tool if used appropriately, but they are not an accurate predictor of prices. A good book that explains the business and financial side of the cattle business is "Knowledge Rich Ranching". You can order it at the following link: [url=http://www.stockmangrassfarmer.net/cgi-bin/page.cgi?id=362.html]http://www.stockmangrassfarmer.net/cgi- ... d=362.html[/url] Just my 2 cents worth. [/QUOTE]
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