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nw oh | I was at a cattle feeding meeting last week and they discussed formula feeding a little bit and the problems it is facing with the lack of cash cattle trading. If my memory serves me right he said that 50-60% of the cattle are sold off of a formula, 10% on a forward contract using CME, and remainder in cash cattle sales.
Here in the East, especially on Holsteins, forward contracts and cash sales at auctions are the main marketing tools used.
Could someone explain a formula contract and why they would be used versus a forward contract. Are these formula cattle normally hedged first and this is their cash sale?
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Formula Cattle Pricing
