.*• Who* To Expoe* (Continued from Page 1) ly an agreement between, a teller and a buyer on the price af a apecified amount and quality of some product at a specified future time of de livery. The 'futures contract peraara the holder of a pro duct la shift some of the mar ket rMc to the buyer of the eontraet In a futures contract the penon who owns or holds the product is called a “hedger". He wants to reduce Jus risk by assuring himself an operating margin. He does this bp selling a contract for future delivery. The buyer then assumes a portion of this risk by agree ing to take delivery at a fu ture date, at a specified price. He is known as a market “speculator”. The hedger stands to gain if the market falls below his aontract price by the time he is to moke delivery. Without that contract he would have SWAYING Service Dairy Bams ftettitry Houses ARBOLA Disinfecting White Paint W Dries White • hhUeete Against .. OiMMW • 9»% Less Cobwebs S 4n If mo. Fly Spraying DISINFECT POULTRY HOUSES « WHoier Rd., R 4, Lane. Maynord Beitnl Phase 3927227 had to sail for less on the cash market,. ' The speculator -benefits if the- actual market at'the time of delivery is more favorable .than the price he has agreed to pay. His ability to forecast fu ture market changes deter mines whether he makes a profit or a loss. The actual commodity is seldom delivered to fulfill a futures contract. Instead, the buyer or seller usually com pletes the transaction by' an offsetting sale or purchase in the futures market. The trading unit to be used k®ef are less exact and are not in the beef futures market is universally used in the m 25,000 pounds of steers, live- dustry. This creates more op weight basis. Two standard Portunity for confusion, error, contracts will be used designat- an d disagreement if cattle are ed as A and B. The A contract delivered on futures contracts specifies delivery of steers Quality variation within a grading Choice or better, |> ra d® is also greater for cat weighing 1,000 to 1,150 pounds “ e *“ an * or grams - and estimated to yield 61 per- 2 SUBSTITUTION Possi cent. The B contract is for bilities Value differences steers grading Choice or better, between grains of different weighing 1,151 to 1,300 pounds, grades are relatively constant, and estimated to yield 62 per- This means that tolerance and cent. Tolerances and substitu- substitutions from the stand tion possibilities are outlined ard delivery contracts can be in the contract details. readily developed. Market price Trading in beef futures re- relationships between steers quires a margin the same as of different weights and grades any other futures markets. The c bange frequently as market initial margin requirement has -supply-demand conditions vary been set at $5OO per trading 01 ‘ exan iple, the market dif unit (25,000 pounds of live- ferential between Good and weight steers). The mainten- Choice grade steers in Apnl ance margin has been set at was . cents; by October it $3OO per trading unit. This had widened to $l5O. means that if the market posi : , 3 &TORABILITY—Grains lion of the buyer or seller-be-, are readily storable and the comes less favorable, an addi- costs of storage are relatively tional margin deposit is neces- constant. They can be easily sary whenever the net value of related to value changes in this margin drops below $3OO, grain futures contracts. Beef, How can the cattle feeder hy contrast, is not readily use this marketing procedure? stored Storage facilities are He is the potential hedger in limited and costly. Consumers the futures market. He is the seem 1° prefer fresh beef to one holding an inventory of frozen. cattle for future sale. A feeder 4 SUPPLY In the could sell a contract at the grain market the supply of time his feeder cattle are pur chased, or at some later time. Futures trading has been very successful with many commodities, particularly in the grain/market where it is used extensively. There are several reasons why grain lends itself to this procedure; let’s compare cattle and grains from these ’ considerations. 1 GRADES Official grades for grams are widely used and accepted in the in dustry, and they permit fair ly accurate quality classifica tions. Official grades for live MUSSER M 327 100% 92% < 1 O. «/) C 0) a. < C o Heavy line shows position of Musser Leghorns among all pens in the 1964 Pa. Random Test in respect to egg production. This is from, the start of 50% production and is projected for 2 months beyond end of test. This strong ZIP in production comes when many other pens are fading—when egg prices are strongest. Other Musser features-. 100% Chick livability; 92% Laying House Livability 69.1% Hen-Day Production. SOUHiD INTERESTING? WRITE FOR DETAILS AND CHICK PRICES. Musssif Leghorn Farms, R. D. 1, Mt. Joy, Pa. Lancaster Farming, Saturday, December 5, 1964—7 the commodity from one har vest to the next is fairly well known from official estimates of crop production and carry over stocks. In addition perio dic reports come through dur ing the marketing year. The supply of beef available for future months is not known precisely. Producing beef is a continuous, year-around opera tion. Difficulty of closely fore casting future beef supplies and prices may be a serious problem. Marketing patterns can be altered greatly due to the flexibility in the weight and condition at which cattle can be slaughtered. Under such conditions there might be some tendency for the beef futures market to be consistently con servative. Due to the supply uncertainty the speculators might be willing to buy only at levels that looked very safe Extremely safe prices from the speculators’ standpoint are not likely to encourage hedging by cattle feeders. In conclusion the report states that futures trading will not solve all the problems of the U.S. cattle feeder. Its suc cess will depend very largely upon whether a beef futures market can attract a large number of cattle feeders and market speculators. (This report goes into de tails and examples too lengthy livestock judging team to relate here; anyone interest- Dec. 10 NEPPCO “Quickie” ed can obtain a copy by writ- Conference, Hotel Commo ing to the lowa State Univer dore, New York sitv Coonerativp Extension “ 7 ' 30 Pm ” E P hrata Youn S sity, Cooperative Extension Farmers clasS) E phrata High Service, Ames, lowa ask school. Subject, “Quality for Farm Outlook, Nov. 12, Milk Production.” 1964, Econ. Inf. No. 940. This 8 p.m., Red Rose DHIA is one of the best studies of Director’s meeting at 'the the subject we have seen). Production Credit Bldg., W. m Roseville Rd., Lancaster, F M A M • Frey and Esh (Continued from Page 1) wasn’t quite enough, to give him a repeat on the title. The Frey herd, runner-up to Esh last year ih butterfat, this year attained an 18,106-pound average milk recox'd. Frey was also one of three dairymen in the state to exceed the 700- pound butterfat level. Raymond and Louise Wit mer, R D 1, Willow Street, had the top Guernsey herd in the state for milk and butterfat production. Their 44-cow herd averaged 12,312 pounds of milk, and 609 pounds of fat during the recently-completed testing year. This is the sec ond consecutive year that the Witmer Guernseys have led the breed’s production at the state level. This is the first time in the history of DHIIA records that the state average milk pro duction has been over the 12,000-pound mark The na tional average is in the neigh borhood of 8,000 pounds. • Farm Calendar (Continued from Page 1) ' LEGHORNS 69.1% J J A S O Pro|ect
Significant historical Pennsylvania newspapers