Feed Ratio

A A A

DEFINITION

The relationship between the price for which a unit of livestock can be sold in the commodities markets and the price of the food required to raise that unit to market weight. The feed ratio takes the market price of the animal at sale and divides it by the price of the food that the animal must consume. Examples include the hog-corn ratio and the steer-corn ratio. These ratios divide the hundredweight price of the animal by the bushel price of corn.



INVESTOPEDIA EXPLAINS

Feed ratios help farmers determine how much feed to produce and what to use it for. If 100 pounds of feed is more valuable than the livestock that can be raised with that feed, it makes more sense for the farmer to shift his production to sell more feed directly as a commodity and reduce his production of livestock. The reverse is also true - if livestock is relatively more valuable than feed, the farmer will shift more of his crop toward feeding animals.




RELATED TERMS
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities ...
  2. Futures Market

    An auction market in which participants buy and sell commodity/future contracts ...
  3. Margin

    1. Borrowed money that is used to purchase securities. This practice is referred ...
  4. Pork Bellies

    A cut of pork that comes from the belly of a pig. Pork bellies were traded in ...
  5. Commodity Futures Contract

    An agreement to buy or sell a set amount of a commodity at a predetermined price ...
  6. Christmas tree (oil and gas)

    A vertical assembly of mechanical elements used in oil exploration and production ...
  7. FPSO (Floating Production Storage ...

    Acronym for Floating Production Storage and Offloading. FPSO is a floating vessel ...
  8. Day rate (oil drilling)

    In oil production, a day rate is the amount a drilling contractor gets paid ...
  9. Houseable

    A piece of art that is able to fit inside a regular-sized living area. Houseable ...
  10. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position in a security or ...
Related Articles
  1. Sugar: A Sweet Deal For Investors
    Sectors

    Sugar: A Sweet Deal For Investors

  2. Intermarket Relationships: Following ...
    Forex Education

    Intermarket Relationships: Following ...

  3. Learn To Corral The Meat Markets
    Active Trading

    Learn To Corral The Meat Markets

  4. Trading The Soft Commodity Markets
    Options & Futures

    Trading The Soft Commodity Markets

  5. Commodities That Move The Markets
    Options & Futures

    Commodities That Move The Markets

  6. Commodity Funds 101
    Mutual Funds & ETFs

    Commodity Funds 101

  7. Futures Fundamentals
    Insurance

    Futures Fundamentals

  8. Curious About Stock Index Futures? Read ...
    Options & Futures

    Curious About Stock Index Futures? Read ...

  9. Trading Opportunities Abound In The ...
    Chart Advisor

    Trading Opportunities Abound In The ...

  10. How to Trade Futures Contracts
    Options & Futures

    How to Trade Futures Contracts

comments powered by Disqus
Hot Definitions
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  2. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  3. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  4. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  5. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
Trading Center