Guidelines for evaluating market opportunities as feed supply, financial situation, or market prices change and select markets for maximum profit
New markets are continually emerging and prices change frequently. Revisiting your decisions about preferred markets on a regular basis, and the method and timing of sales, puts you in a good position to take up opportunities arising from changes in market specifications, market prices or selling options.
Look for alternative marketing opportunities that may better match the range of product specifications you can supply. A particular market opportunity may justify an increase in inputs to the production system to enhance your capacity to deliver to specifications. In this case complete a partial budget to confirm the option and examine the risks.
While looking into new market options, consider building alliances and developing long-term relationships with regular customers. If switching to an alternative selling system make sure the ‘pros’ and ‘cons’ of a change are carefully thought out before a final decision is taken. Refer to (Range of selling options) for the range of selling options currently available across southern Australia.
Two selling options that offer efficiency and suitability for individual enterprises include:
- Forward contracts. A contractual agreement between a seller (producer) and a buyer (processor) to supply a given product at a future point in time for a given price. In some cases, the price is fixed, thereby reducing the producer’s exposure to a fall in market price.
-Cattle futures. Cattle futures are an obligation to buy or sell a specific quantity and quality of cattle on a specified future date. The price is determined by the futures market price when entering into the contract. Cattle futures offer producers an alternative method of securing a sale price in advance, thereby reducing exposure to price movements.
What to measure and when
Monitor the predicted net returns and best time of sale for each group of animals destined for the target market(s), and all potentially available buyers.
This may need to be conducted frequently as sale groups approach the projected sale date or if the market prices are irregular.
Market information is available from MLA, including the National Livestock Reporting Service, which can assist in providing accurate and timely market data (see Obtaining price and other market information).
