ABERDEEN, S.D. (AP) — A South Dakota man has created a new online site where livestock producers can contract to sell their cattle.
Kim Ulmer, who owns a livestock and machinery marketing company in Huron, said he created the American Mercantile Exchange in response to volatile market conditions.
The first contract sales on the American Mercantile Exchange were Sept. 3. Four loads of cattle were up for sale and all four sold, Ulmer told the Aberdeen News.
"It's in its early stages," Ulmer said. "But it's important to give it a try. If you don't do it, what's the other option?"
Sales will be limited to cattle that are close to sale weight until the mercantile has a larger database of buyers and sellers, Ulmer said.
Ulmer said selling cattle through his exchange is different from an auction barn because it eliminates the need for farmers to take the cattle to auction and sell on a particular day. Buyers and sellers are both vetted to ensure the sales represent the actual purchase of cattle and that the sellers are licensed, bonded dealers, he said. All cattle for sale are reviewed and photographed before the sale.
After the cattle are sold, delivery agents handle the next step, Ulmer said.
South Dakota does not allow for online auction sales, so American Mercantile Exchange was set up as an Indiana corporation, Ulmer said. His company and others will then be associated as listing, delivery or marketing representatives.
"The main thing is to protect the 700,000 family producers," Ulmer said.
Ulmer has been critical of the Chicago Mercantile Exchange and its effect on livestock prices. While forward-contracting happens on the Chicago exchange, he said, those contracts are bought and sold by speculators often without the actual purchase of cattle.
"We feel like there's nothing else we can do to get this corrected," he said.
With current market conditions, prices rise and fall every 30 to 60 days, Ulmer said. By selling on the American Mercantile Exchange, farmers and ranchers can arrange for the sale of cattle when prices are high instead of waiting for cattle to reach sale weight and taking the prices offered the day of the auction, he said.
As the exchange is currently set up, auctions will be scheduled every other Tuesday. Ulmer said that eventually he would like to have weekly auctions followed by timed auctions on Wednesday, Thursday and Friday for contracts that don't sell during the live auctions.
Ulmer said his goal is to have contract sales across the U.S. For now, the contracts are from the Upper Midwest, he said.
Information from: Aberdeen American News, http://www.aberdeennews.com