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Factors Affecting Efficiency of Feeder Cattle Hedging in Kentucky

Published online by Cambridge University Press:  28 April 2015

Stephen L. O'Bryan ,
Barry W. Bobst  and
Joe T. Davis
Stephen L. O'Bryan
Affiliation:
Department of Agricultural Economics, University of Kentucky
Barry W. Bobst
Affiliation:
Department of Agricultural Economics, University of Kentucky
Joe T. Davis
Affiliation:
Department of Agricultural Economics, University of Kentucky
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Extract

Recent commodity price volatility and development of new futures contracts has kindled interest in hedging among farmers in many parts of the country. Due to the importance of feeder cattle production in Kentucky and in the South generally, recent development of a feeder cattle contract is of special interest. This paper addresses some potential problems associated with use of feeder cattle futures markets by Kentucky producers. Specifically, it tries to: (1) determine the effect, if any, of location basis variability on ex post hedging results in Kentucky markets versus delivery markets at Omaha and Oklahoma City, (2) assess the ability of hedging to reduce revenue variability as compared to cash marketing and (3) determining the presence of bias in feeder cattle futures prices.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 9 , Issue 1 , July 1977 , pp. 185 - 189
Copyright
Copyright © Southern Agricultural Economics Association 1977

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References

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