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Illinois | I have a good friend in the cattle business. I’m a grain guy. We both share ideas and give each other advice. I’m trying to understand the approach of buy/sell cattle trading. He is telling me it’s a good way to make money and explains that the money is made in the “buy” and not the “sale”.
I am having a tough time with this one. As I understand, pick out what might be considered to be over-valued animals right now, maybe that’s $2700 cow-calf pairs. Use the money from selling those and buy perceived under-valued animals. Maybe those right now are $1,700 short-solid 2nd periods. He says in that scenario, he’s made $1,000 per head.
I don’t understand this. I don’t see how you can say any money is made until those actual animals you bought are sold and all expenses against them are factored in. In my head, that takes us back to conventional marketing. All it is is trading dollars that you hope over a few year period of times comes out positive.
I understand that if you’re able to turn those $1,700 animals into $2,700 pairs in 7-8 months, then by selling them, your profit is $1,000 per head, less all expenses incurred for that period of time. With that comes all the normal risks of death-loss, no calf, etc. So in my simple mind, if I’m thinking right, how is this any different than any other method of growing and selling any commodity?
I want to hear that I’m wrong and not understanding the method correctly, so please tell me either way.
Edited by Brandon 5/16/2024 06:48
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Help me understand the sell/buy approach to profiting
