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Purchasing cattle represents a significant input cost, if you know your cost of production and required profit margin, forward pricing your cattle is an excellent cash management tool. Platinum now offers an indicator price contract. We worry about price you fatten the cattle.
This is how it works. Contact Platinum & determine the following:
The Contract. · Maturity date (when Cattle are to be sold). · The anticipated quantity. (Kgs cwt) For the purpose of the contract, weights quoted are in Carcass weight, approximately 54% of live weight. · The Indicator price (B) quoted by Platinum.
A contract deposit is required within 7 days.
Spot Cattle sale (auction, feedlot, works, private etc).
Your cattle are sold in the usual way on the date specified. · The actual quantity is determined. · The average price for the cattle is determined (D). · The EYCI is determined by MLA/SFE(E).
Finalisation.
The Basis (C) equals your average cattle price (D) minus the EYCI (E) .This is then added to the indicator price (B) to give your final contract price.
Weights delivered above or below the contract quantity are settled out at the average cattle price (D).
You are probably wondering how much it costs. The cost is factored in to your quoted indicator price, the contract deposit is settled against your proceeds at finalisation. |
