A
Anonymous
Guest
A feeder from Iowa had 2000 steers to purchase for his feedlot to be delivered in November of 2005. 10 pens of 200 head. He knew what his expenses were, he knew what his corn was worth, and he knew what he could pay to lock in a small profit on part of his fat cattle for May delivery. He was concerned about what the price of feeder cattle might be that fall in the sale barns.
One day in September, he started crunching the numbers and he happened to be watching the Superior Livestock Auction at the same time. He liked the type of cattle that were being sold so he got on the phone and he ended up buying 10 triple axle pot loads of black steers weighing in at 575 pounds for November delivery from Superior Livestock sales. He got those steers bought for $2/cwt higher than what he was wanting to buy them but he felt he could save some money on trucking to offset some of the difference in price because these calves weren't very far away. He also felt that if he could just get part of his needs met now through Superior Livestock, he would have that many less cattle to buy in the barns this fall and he could adjust his price on the balance of his needs.
That fall in the salebarn, he put out a number of orders to different buyers to buy the same type of calves for $3 - $4 per cwt less than he paid for his video calves. The futures market and corn price had changed very little since his September video purchase. He finally got the last 1000 head bought and they averaged $3.00 /cwt less than the video calves did.
Since his sale barn cash price was lower than his forward contract video sale price, is that market manipulation?
As his video calf supply price went up, the cash market price in the sale barn that he was willing to pay went down.
The video sale producers benefitted at the expense of the sale barn producers.
Could this be grounds for a video auction blamer's lawsuit?
WHAT'S THE DIFFERENCE BETWEEN THAT AND THE PACKER DROPPING HIS PRICE IN THE CASH MARKET TO REFLECT HIS PURCHASES IN THE FORMULA MARKET?????
~SH~
One day in September, he started crunching the numbers and he happened to be watching the Superior Livestock Auction at the same time. He liked the type of cattle that were being sold so he got on the phone and he ended up buying 10 triple axle pot loads of black steers weighing in at 575 pounds for November delivery from Superior Livestock sales. He got those steers bought for $2/cwt higher than what he was wanting to buy them but he felt he could save some money on trucking to offset some of the difference in price because these calves weren't very far away. He also felt that if he could just get part of his needs met now through Superior Livestock, he would have that many less cattle to buy in the barns this fall and he could adjust his price on the balance of his needs.
That fall in the salebarn, he put out a number of orders to different buyers to buy the same type of calves for $3 - $4 per cwt less than he paid for his video calves. The futures market and corn price had changed very little since his September video purchase. He finally got the last 1000 head bought and they averaged $3.00 /cwt less than the video calves did.
Since his sale barn cash price was lower than his forward contract video sale price, is that market manipulation?
As his video calf supply price went up, the cash market price in the sale barn that he was willing to pay went down.
The video sale producers benefitted at the expense of the sale barn producers.
Could this be grounds for a video auction blamer's lawsuit?
WHAT'S THE DIFFERENCE BETWEEN THAT AND THE PACKER DROPPING HIS PRICE IN THE CASH MARKET TO REFLECT HIS PURCHASES IN THE FORMULA MARKET?????
~SH~