"DO you reckon I should tell Harry to start trading cattle, sell all the sheep and trade?"

Ted has an uncanny knack of dropping in when I have an important report to finish or some assessment to make, but he didn't tackle me about last week's soil-testing article.

Since he retired, he has too much time on his hands and although his son Harry is more than capable of running the farm, Ted still likes to toss in his "two-bobs worth".

Offloading some sheep at today's prices has some appeal and it will certainly pay for Harry to think about cashing in some of his sheep and pocketing the money.

These prices may not last forever.

But for those who have had rain and have paddocks with feed, there is an overwhelming urge to buy stock.

If sheep are too costly, cattle may look like a good option.

Trading steers is often reported as the most profitable livestock enterprise in southern Australia.

The margins look terrific and as long as you buy and sell in the same market, you apparently can't go wrong. Or can you?

The reality is that few people have the knowledge, skills, temperament, property facilities and the feed to be serious cattle traders.

Those who have all of the above will mostly gross a lot of money, but although they won't talk about it, they will sometimes lose some too.

People who are really serious about fattening cattle either background or operate feedlots and try to ensure that cattle are forward sold before they buy them. That can reduce risk to an acceptable level.

There are successful cattle traders who specialise in growing and fattening. However, most traders trade a modest number in relation to their total herd.

For example, a cow/calf breeder running say 300 cows may see an opportunity to trade 40 or 50 steers.

If the trade turns sour because the market goes south, the loss will be manageable.

Feed availability is the other important consideration. Some areas of Victoria and the Riverina have September feed now. It is likely that it will keep growing.

But cattle purchased now may have to be held until the spring.

If Harry estimates the feed on offer now and the likely growth until July he can assess the number he could buy.

If he assumes the market stays at its current level in cents/kg he can calculate the weight gain to work out the probable dollar increase per head over time he would have the cattle.

For example, if he can buy at about 330kg at $1.80/kg and sell for the same price, the 70kg weight gain will gross $126. Freight both ways and selling costs could be about $85 per head and the gross margin $40.

Finance and overhead costs need to be deducted from the $40 so the margins are slim, and there is a downside: running cattle in winter without feed is no fun.

Of course Harry didn't ask me, his old man did and if Ted suggests it to Harry it probably won't happen.