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Journal of Agricultural and Resource Economics >
Volume 17, Number 01, July 1992 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/30729
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| Title: | CASH FORWARD CONTRACTING VERSUS HEDGING OF FED CATTLE, AND THE IMPACT OF CASH CONTRACTING ON CASH PRICES |
| Authors: | Elam, Emmett W. |
| Issue Date: | 1992-07 |
| Abstract: | This research examines cash forward contracting of fed cattle. For an individual feeder, a cash contract eliminates basis risk (as compared to a futures hedge). However, the disadvantage is that the contract price is estimated to be lower than the futures hedge price by $.28 - $.59/ cwt for steers and $.86 - $1.64.cwt for heifers. From the industry perspective, contracting appears to have a negative impact on cash prices. An increase of 1,000 head in U.S. monthly contract cattle shipments is associated with a $.003$.009/cwt decrease in the U.S. average cash price. The negative impact of cash contracting varies by state. |
| URI: | http://purl.umn.edu/30729 |
| Institution/Association: | Journal of Agricultural and Resource Economics>Volume 17, Number 01, July 1992 |
| Total Pages: | 13 |
| Language: | English |
| From Page: | 205 |
| To Page: | 217 |
| Collections: | Volume 17, Number 01, July 1992
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| 17010205.pdf | 1137Kb | PDF | View/Open |
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