Cash price negotiated between buyer and seller where the price is known at the time the deal is struck and will not change regardless of how the cattle perform. All that is needed for payment is a weight. Slaughter is expected within 14 days, and usually within 7 days.
NEGOTIATED GRID PURCHASE
The base price is negotiated between buyer and seller and is known at the time the deal is struck and delivery is expected within 14 days. However, the final net price paid to the producer will be determined by applying a grid of premiums and discounts after slaughter based on carcass performance.
The base price is not negotiated but is based on some other price (such as plant average or weighted average price) or value determining mechanism that may or may not be known at the time the deal is struck. The original purchase arrangement may be made from days to months ahead of slaughter. The final net price paid to the producer is determined after application of premiums and discounts. The producer normally has few, if any options, concerning the pricing once the formula is agreed to.
FORWARD CONTRACT PURCHASE
The base price is based off the CME, or some other comparable publicly available price that is available for months in advance. This base price is normally a moving target that the producer has the option to nail down at some point during the life of the contract. A forward contract may also be a firm cash price with delivery in excess of 14 days. The final net price paid to the producer is determined at delivery if there are no possible adjustments in the contract, if there are possible premiums/discounts, the net is determined after slaughter.
Cattle are reported as 'committed' as soon as they are scheduled for slaughter.
Cattle are reported as 'delivered' when they are unloaded at the plant.
Reports will not be released to the public if they would clearly reveal any individual company's business. MPR requires that a test rule be applied to all reports after data is compiled but prior to its release. The current test used is defined below and is applied to each report individually and "over time", currently the most recent 60 business day period.
In order for a report (regional or national) to be published, at least 3 companies have to submit data 50% of the time or more over a 60-day period. No one company can account for 70% or more of the cumulative market volume for any individual report over a 60-day period. In cases where only one company submits data for individual reports, the same company can not be the sole reporting entity more than 20% of the time during a 60-day period.
Cattle that a packer owns for at least 14 days immediately before slaughter.