Feedlot Agreement

For sellers, cattle sellers, including cow and calf producers, base land operators or forage operators, also have reasons to submit contracts, including: Example 1 – Conditions for slaughter cattle: it is February 15. A feeding field owner feeds slaughter horses that he expects to be ready to market at the end of March. The calculated breakeven, which covers all the costs of these oxen, is USD 118.64/cwt. Packer A offers the plant a base of $5.00 under April Live Cattle Futures FOB. The futures market for April is $136.00. The exchange rate is $US 0.9033 per C.- Freight to package A costs USD 3/cwt. Therefore, the calculation to determine the final price is when the seller accepts the basic contract and blocks it today in future: the owner of the production area in this example estimates that the cattle need 4.00 USD/cwt for the grading costs (cattle not compliant with the specifications of the contract). The following terms are often used with respect to denforward contracts. They are defined below in this context.

Futures Market – Cattle Live Futures and Feeder Cattle Futures on the Chicago Mercantile Exchange (CME) in Chicago. These futures are most used under the formula to determine a local Alberta price when futures contracts. Cash (or spot) market – current price for a given product in a given market at a given location. Base – the price difference between the local cash market and the futures market at any given time. This number represents things such as current local supply and demand conditions, freight between markets and marketing fees (for more details, check out the module: understand and use the basic levels in cattle markets). Contract specifications – a specific description of the livestock to be supplied under the agreement. Cattle that do not comply with these specifications may be subject to discounts that may or may not be set in advance in the agreement. Cattle that exceed contract specifications may receive premiums. Discounts or bonuses should be set in the contract at the time of signing. Delivery – the agreed time frame for the delivery of livestock. FOB (Free on Board) – FOB Place of origin means that cattle are sold on the farm or in the country or feeding area and that the buyer pays for the freight from that place.

FOB-Lieferstelle or FOB means that livestock is delivered to a predetermined location, for example. B a feeding or slaughtering plant, and the seller pays the load there. Most futures contracts are based on the “FOB delivery point” or “FOB provided,” i.e. the seller pays for the freight. Load Lots – Most forward cattle contracts are based on a load quantity of 60 to 64 thousand pounds of live weight, depending on the type of animal. It`s about a three-axle full of cattle.

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