Beef Buzz News
Tom Fanning Contrasts Cash Trade vs. Negotiated Grid Pricing
Thu, 04 Nov 2021 10:11:09 CDT
We have been talking a great deal about negotiated cattle trade and the desire to have more price discovery in our fed cattle marketplace. One way to do that is with straight cash cattle trade sales; a price that is negotiated between the cattle owner, feedlot operator and the packer. Another way to achieve more price discovery and get more for your cattle is through negotiated grid sales.
Listen to Ron's conversation with Tom here.
Tom Fanning, a feedlot manager with Buffalo Feeders, was good enough to explain exactly what the negotiation process looks like when talking about negotiated grid sales.
“At Buffalo, we typically have three packers that we are working with,” Fanning said.
Cargill, National Beef and Tyson, with Cargill and National Beef being the primary buyers each week, according to Fanning.
“Cargill has been the biggest supporter of the negotiated grid,” Fanning said. “Each week, if I have cattle that they want to buy, we negotiate the base price … then they ask me, ‘now that we have negotiated the base price, how do you want to sell the cattle - cash or the grid?’”
Fanning said if he chooses grid, all the specs, premiums and discounts have already been agreed on. At that point he picks, he added.
“Therefore, we have negotiated the base price, on a specific day, at a specific time for the cattle they are going to own and they have to deliver those within seven days - just like normal,” Fanning said. “But we get an opportunity to add value to that set of cattle, if they are high-value cattle and get premiums - especially with this choice-select spread that we have seen going through this fall.”
Fanning said Buffalo Feeders is very data-driven, working closely with producers to get the best prices possible for their cattle.
Click on the LISTEN BAR below to hear more from Ron Hays and Tom Fanning as they talk about Buffalo Feeders and how they navigate negotiated cash and grid trade.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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