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Cash markets Paid more from 1987-2000, Risk can be lowered!

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Murgen

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Here's a study that showed the cash market paid producers more from 1987-2000. Although risk can be lowered through Futures etc.

http://www.econ.iastate.edu/faculty/lawrence/Acrobat/ManagingCattlePriceRisk.pdf

What are the typical commisions paid in the US salebarns?
 

Jason

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Murgen how dare you!!!! I think you might have just proven why Pickett was overturned.

I like the very last comments, cash always returns the best profits, but placing puts protects you from the downside and keeps almost all the upside available.
 

Econ101

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Jason said:
Murgen how dare you!!!! I think you might have just proven why Pickett was overturned.

I like the very last comments, cash always returns the best profits, but placing puts protects you from the downside and keeps almost all the upside available.

Jason, you probably do not understand the econometric analysis that was done on the data. The analysis allows for movements of the markets. The question was never a question of movement of the markets. It was always a discrimination of the cash market compared to the captive supply. There is a big difference here. This is the reason that this argument is moot. Just because the market is on an upward trend and the captive supply is at a one week price lag or whatever it happens to be, does not necessarily mean that the cash will always be higher.

This evidence does suggest something very different than the conclusions drawn, however. If the cash market was higher during all of these times during certain periods, then it can be shown that another argument that SH and Agman makes is incorrect. SH and Agman argue that grid and formula pricing bring value and that is why they were higher paid. Of course this is disproved if over a long period of time this hypothesis is not proven.

There is a big difference in time periods being analyzed that makes a big difference in all of the arguments. ANYTIME there is a significant difference in the price of the cash market compared to captive supplies for the same product there is evidence of market manipulation. Whether this evidence is a statistically insignificant amount and could be written off as a market aberration (packers running through excess inventory) instead of a market manipulation movement depends on the duration of the sum of the differences in between the markets. As has been shown by RKaiser and others on this forum, boxed beef prices could be a factor in buying of cattle in the cash market but so is the inventory that the packers have. To the extent that packers are using their inventory to lower their cash price and hence their formula cattle and next week’s grid (captive supply) price, there is market manipulation. This market depression can be shown on rising or falling markets.

In the end, it is your choice to believe in whatever you want to believe. The 12 jurors believed Dr. Taylor and even Mike C. There has been no plausible explanation as to why Judge Strom overturned this jury verdict or why the appellate court did. In the case of the appellate court, the court made some very big mistakes in their brief. In addition to those mistakes (and these are material mistakes, not just little errors) they essentially legislated from the bench on their ruling and way overstepped the bounds of the judiciary. Why they did that needs to be investigated thoroughly. With the payoffs the packers are giving to members of the senate judiciary and they ties Arlen Specter has to packer interests, there are some serious questions to be raised about the integrity of the U.S. court system.
 

Sandhusker

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Thanks for the post, Murgen. This is exactly the kind of things that we need more of on this site - informative and useful.

I had to laugh and shake my head at Jason and BMR. This article was about the futures markets, particularly the use of puts. Pickett was about captive supply. If they can come up with any connection, I'd entertain more posts from them.
 
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Anonymous

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Sandhusker: "This article was about the futures markets, particularly the use of puts. Pickett was about captive supply."

Hahaha!

Forward contracts are based on the futures market and forward contracts are captive supply.

This debate is not for the clueless!


Kindergarten: "Jason, you probably do not understand the econometric analysis that was done on the data. The analysis allows for movements of the markets."

Translation: I can't back my position on Pickett so I'll pretend that I can.


Kindergarten: "The question was never a question of movement of the markets. It was always a discrimination of the cash market compared to the captive supply. There is a big difference here. This is the reason that this argument is moot."

There is no way you can account for the difference between the cash market and the formula market without accounting for normal market movements. You failed to do that!

The argument is relevant.


Kindergarten: "Just because the market is on an upward trend and the captive supply is at a one week price lag or whatever it happens to be, does not necessarily mean that the cash will always be higher."

How do you figure?

Can you show where the market was in an upward trend where the captive supply price was lower?

I didn't think so!

Still throwing sh*t against the wall to see what might stick.


Kindergarten: "If the cash market was higher during all of these times during certain periods, then it can be shown that another argument that SH and Agman makes is incorrect. SH and Agman argue that grid and formula pricing bring value and that is why they were higher paid. Of course this is disproved if over a long period of time this hypothesis is not proven."

Futures market is not formula pricing!

You don't know anything do you?


Kindergarten: "ANYTIME there is a significant difference in the price of the cash market compared to captive supplies for the same product there is evidence of market manipulation."

Hahaha!

He just gets done acknowledging that there could be a price difference between formula pricing and cash prices due to normal market movements then turns right around and defends his previous position that a significant difference between cash prices and formula prices is proof of market manipulation. Absolutely amazing!

Just ignores the evidence and keeps convincing himself that there should never be a difference between the cash price and the formula price.


Kindergarten:
"As has been shown by RKaiser and others on this forum, boxed beef prices could be a factor in buying of cattle in the cash market but so is the inventory that the packers have. To the extent that packers are using their inventory to lower their cash price and hence their formula cattle and next week’s grid (captive supply) price, there is market manipulation. This market depression can be shown on rising or falling markets."

Canada's situation of not having access to the U.S. market is hardly comparable to normal supply and demand situations in the U.S. You have to be pretty desperate to draw any comparison.

Packers will always lower their cash price as their needs are being met just like the feeder cattle buyers lower their price as their needs are met.

If it's market manipulation in one area, it has to be market manipulation in the other.

Lowering your price as your needs are met is not market manipulation.

I would have loved to ask Johnny Smith and Pat Goggins why nobody wants their cattle to sell at the end of the sale and why that is different than lowering your price for fat cattle as your needs are met.


Kindergarten: "There has been no plausible explanation as to why Judge Strom overturned this jury verdict or why the appellate court did."

Judge Strom listed many reasons as to why he overturned the verdict in his ruling. Mainly that there was no proof of market manipulation as is evidenced by the anti corporate packer blamers here trying to discredit him without providing the proof to back their market manipulation conspiracy theory.


Kindergarten: "In the case of the appellate court, the court made some very big mistakes in their brief."

Talk is cheap!


Kindergarten: "With the payoffs the packers are giving to members of the senate judiciary and they ties Arlen Specter has to packer interests, there are some serious questions to be raised about the integrity of the U.S. court system."

Typical conspiracy theorist!


You got nothing!


~SH~
 

Econ101

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Quote:
Kindergarten: "Just because the market is on an upward trend and the captive supply is at a one week price lag or whatever it happens to be, does not necessarily mean that the cash will always be higher."


How do you figure?

Can you show where the market was in an upward trend where the captive supply price was lower?

I didn't think so!

Still throwing sh*t against the wall to see what might stick.

SH, I am only going to explain this to you one time and one time only. Go look at almost any stock price on any of the exchanges and look at their daily graph over a period of say, a month. Take almost any time period. You will notice that the daily price of a stock fluctuates even if the trend is up or down. If the trend is up, you will notice that there are times that the price can be higher the week before a lot of times. This disproves your argument. It all depends on the time period you look at.

In the commodity trades that Hillary Clinton made while at the Rose Law firm, the times of the trades between Tyson and Clinton were very close together. At that time one of the problems with GIPSA's data was that there were not adequate time stamps on all of the trades. That problem has been corrected to my knowledge. This is an example of how a market can be moved on a very micro level with very little time differences between trades. The sum of all of these trades was over $100,000.00 to Hillary. You can tell that it really did not matter what way the market was going. Hillary just needed to know what way the market was being pushed to make the money she did.

I will explain on a separate post how the captive supply prices gave Tyson an edge from a personal story.
 
A

Anonymous

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What the hell does stock price fluctuations have to do with cattle market fluctuations?

We are talking about cattle prices here, stay on topic for once. I'm tired of your incomparable analogies.

AGAIN,

Can you show where the market was in an upward trend where the captive supply price was lower?

Your arguments are hollow!



~SH~
 

Econ101

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~SH~ said:
What the hell does stock price fluctuations have to do with cattle market fluctuations?

We are talking about cattle prices here, stay on topic for once. I'm tired of your incomparable analogies.

AGAIN,

Can you show where the market was in an upward trend where the captive supply price was lower?

Your arguments are hollow!



~SH~

You can find anomolies in everything.
 

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