I know this has been asked over the ages, I have no doubt. But what if I go long beef futures, and don't close out the contract? Will they actually have to deliver? I think I remember reading theoretically this could happen, but everyone closes out because its easier on everyone just to take the cash settlement or what not. But what if I *REALLY* want those cows? I have a cousin who has a husband that, while he is not a full time butcher, he has butchered pretty much EVERYTHING in his life, including cows. I'm sure he would butcher the cows for free as long as he got to keep just a few pieces of meat. And I live in a well-to-do wealthy neighborhood (well, I don't technically live there, but close enough, so I walk and exercise there and they know me well). If I went door to door advertising free, newly butchered pieces of meat going on sell in the HEB parking lot on such-a-such date, first come, here are the prices per piece: $A for X, $B for Y, and $C for Z, etc. etc., and those prices were even a little bit below what they could get the meat at HEB, Krogers, Randalls, Wal-Mart, Costco, etc. for, I am sure they would go CRAZY and I'd be sold out in just a few hours. And I have no doubt taking a delivery at prices that are literally the wholesale of wholesale would let me sell the beef at those prices and still make a killing. So, ETers, can this be done? I want my motherfuking COWS!!! Thanks!
You may need to read the print of each futures. Like CME group, some of their futures products Are cash settled.
This is not a silly question. you need to have a deep pocket. also, you have to slaughter quite a few cows. It can be fun to have a taste of the deliverable process, or it can really stress you out. mooo !!!
You might use the contract to hedge, but it's unlikely you would take delivery. Just contract with a rancher to buy a cow(s). Transportation costs could kill you otherwise and then all the other associated costs. https://www.cmegroup.com/trading/agricultural/livestock/livestock-delivery-overview.html
Future delivery aside, I don't think you could butcher and sell raw meat so easily, without all the personal and location's certificates and food safety requirements in place. I often read that most retail brokers tend to close the position before delivery.
One futures contract LE (live cattle) contains 40,000 lbs (about 18,000 kg). That will keep your friend the butcher busy for quite some time.
Hollywood beat him to it ......... by a few decades:- Plot Henrietta and Pete Robbins are a young couple struggling to get by on the income he earns as a cab driver. His pompous sister-in-law Helen delights in reminding them that an early marriage robbed him of a college education and how much better off she and her husband Fred are. When Pete gets an inside tip on pork belly futures, Henrietta borrows $3,000 from a Mafia loan shark to purchase the commodity. Unfortunately, its value doesn't increase as rapidly as she anticipated. When she's unable to pay her debt, her contract is sold to Mrs. Cherry, a grandmotherly-type who operates a prostitution ring. When Henrietta's initial attempts at entertaining clients prove to be less than successful, her contract is sold yet again...and again, as Henrietta fails to fulfill the requirements of each new individual to whom she becomes indebted — each time for more money — and tries to keep her new enterprises (bomber, then cattle rustler) secret from her unsuspecting husband. https://en.wikipedia.org/wiki/For_Pete's_Sake_(film)
you need to PROVE that you are capable of taking delivery, or the FCM will force liquidate your position by FND, well before expiration lol
Also, research USDA regs/inspection of slaughtered meat for sale to understand the workaround. A knowledgeable meat cutter is gold. All our state’s small/medium slaughterhouses are now booked two years out.
Sure, if you still want the beef and have the cash to pay for it they will give you a receipt and the address of the warehouse/stockyard where you can pick up the product. If you don't want immediate delivery you will have to pay storage fees of course. Not sure why you want to trouble yourself with this messy beef delivery business, when you can simply profit from the price moves from your Futures trading account.