Stillthefoxhat, you wrote the following and my replies are in between the individual paragraghs.
"Some good explanations there. A question if you don't mind...As a taker of a futures contract whether it be for cattle or grains, do you pay a premium to the contract writer? "
No, I don't STFH. I usually like to do the dealings with the prospective buyers/end-users directly myself and by doing it in this way I don't have to pay any commission to a middle man either. And let me tell you, that if your product is quality and satisfactory to what they require/demand, they will pay you the money. On the other hand if your dressed carcass weight, or the fat content is not within a specified category and quality, then you can be penalised at times up to 10 cents per kilo. Age and mouthing of the cattle (I.e. milk tooth and/or a maximum of two tooth), is very important as well in order to get a premium on your final dressed/hanged product. If you want to deal with these poeple, you have to toe the line and sell them quality, not rubbish. If you do, they will continue to be wanting to deal with you, and if you sell them rubbish, you will become a goner.
You also have to be prepared to try and help them as much as possible, within certain limitations of course. For, if you do, they will continue to deal with you for a long time. It is a two way street. Although I don't sell much in the stockyards anymore, it is a good feeling when the buyers approach you if they see you there, while asking you if you are selling any of your cattle.
Yesterday for instance the livestock buyer for the abattoir/end-user (I am not at liberty to say who he is buying for), called in and asked for us to supply them by next tuesday with 25 to 30 heads of cattle in order to fill the chain that was short for the day. After inviting him to come and have a look, He came out and selected the ones he wanted. All we have to do now, is to get them there by next Monday night ready for the kill on Tuesday. I am sure that he will keep that in mind for the next time we need his help. A little like "I scratch your back and you will scratch mine".
On the other hand, as for the cattle that have to be sent to a finishing feedlot, we have to go through a Livestock Agent and pay commission. Feedlots usually prefers to go through Livestock Agents especially when they are owned by themselves (E.G. Elders) and I don't mind because I know that I will, get my money within a week or so. And, in times that the feed is in short supply, it does help a lot. As contracts are getting harder and harder to get them to sign, it is usually the norm that a deal will be made on the day for the supply at a certain date. We also regularly receive either an E-mail or a text message informing us what the feedlots are prepared to pay on a given date.
Of course the cattle required by the feedlots don't have to be on a finished basis and ready for slaughter conditions, for it is their job to finish the cattle to satisfy their own needs. Different feedlots have different contracts to fill depending on whom and where their finished cattle will go.
"Another question...looking into the future of increased demand for food notably grains and protein (you are certainly well placed here) I am considering a purchasing a property in the NE region. Is there demand for land to be leased out to growers at the moment. I understand there are probably many variables but it may go someway to subsidise the property along with grazing.."
STFH, I am not in a position to offer advice on how one has to spend his money on. I am of the strong belief though, that lands is in an extremely short supply and that God has finished making it altogether. So, what we have is what we have got and what we will have for ever and a day. Unless of course we will be starting to make moves to moving up to the moon. The constant buy of our farming lands by foreign interests, especially the Chinese, is a testament of that. IMHO, they want our lands for two reasons: A) Because it is very cheap in comparison to other parts of the world and in their own country, and B) Because they know full well that with the population they have, and growing, they will need to be starting to secure themselves with more lands and to produce food to satisfy their growing demands, wherever they can.
I do also believe strongly to put as much of my available cash into buying farming lands because IMHO I can't see that we could do without it if we are to supply our continuing and ever increasing demanding needs of food.
I am also sure that if you were to buy lands and put it out on a leasing or sharefarming basis, someone will take up the offer.
That is all I can tell you my friend, and I hope that it will help.
For people that may find these comments a little too boring, please take note that I am only replying to some fair questions put to me and to the forum, which I believe I can answer, and that IMHO I have sufficient knowledge to do so.
Cheers and good luck, and please don't take it as a financial advice and DYOR.
