Re: current $ beef on the hoof
Ol' Hippie <firstname.lastname@example.org> wrote:
>Anyone know the going price for beef on the hoof?
US$0.80/lb and dropping. It was $1.00 two weeks ago.http://futures.tradingcharts.com/chart/FC/14
(What follows is from memory, so ymmv).
The government imposes futures trading price change limits like the circuit-breakers on the stock
markets, with a twist.
The limit starts at 1.5 cents per day. But if the move pegs at 1.5 cents in the same direction two
days in a row, it goes to 3 cents. If it pegs again, it goes to 5 cents.
If during any of this it doesn't peg one day, the limit drops to the next lower one (3 cents if it's
already at 5 cents, and so on).
The limits prevent manipulations from being too successful, and they give the government time to
stop manipulations or spin away fear from natural disasters such as this mad-cow thing (although all
they've done so far is scare people even more than necessary, and really, how hard would it be for
the POTUS to grab a mad cow from somewhere else and have it show up in an American herd, then make
up a few press releases...). The limits for futures *options* are quite another thing, and the idea
of an option on a future just blows my mind, so I don't need to go into it.
Oh, and there's a whole page of rules and formulae for figuring out what the 80 cents/lb is for,
considering how variable cattle can be in size and quality. Nominally, it's for a given mix of
"Select" and "Choice" graded cattle none of which is ill to a certain degree on the day of delivery.
The contract is for 40,000 lbs, so 80 cents/lb works out to about $32K/contract. Delivery consists
of taking them from one company's pen at the yard, checking them over, weighing them, and leading
them into another company's pen in the same yard. Whether any trucks get involved before and after
this is not the market's problem.
As for the price at retail, I can assure you that Safeway is still offering "Select" grade strip
steaks for $9.49/lb. They think I'm dumb. They need to read my stuff.
--Blair "Me: Have any Choice? Butcher: You never did..."