Changing Class Week #4 !
In this video Grahame will walk you the thinking and decision making process when we are changing class. We may find ourselves selling animals and wanting to change class from say steers to cows.
Let's assume we own 420 kg steers and we are looking to see if they can be replaced by 260 kg steers at a profit. The above calculator shows a loss of $62.67 if we sold them and replaced.
In the example below we are looking to see what if we take those 420 kg steers forward to 500 kg.That also shows a loss of $29.48.
So we look to change class and buy cows.
(note when taking them forward we ONLY include agistment and interest if it is appropriate)
PUT THE MONEY INVENTORY LIKE IT IS A COW
We sell the steers and put that money in the money inventory ~ that is now the available money for the new trade.This MUST include the Cost of Carry on the new trade.
The spreadsheet below looks at taking that money and buying Dry Cows and joining taking up to PTIC.This is a phantom sell based on todays price of $1400 for PTIC.
If you wish you could allocate some profit from the trade but remember at time it is not all profit as it could be an arbitrage between classes and species.
Check out this weeks KLR 30 Sec Report Now
TAKE ME TO THE KLR 30 SEC REPORT NOW !