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HEDGING FEEDER STEERS AND HEIFERS IN THE CASH-SETTLED FEEDER CATTLE FUTURES MARKET

Ted C. Shroeder and James Mintert ()

Western Journal of Agricultural Economics, 1988, vol. 13, issue 2, 11

Abstract: Recent changes in the feeder cattle futures contract specifications are expected to reduce hedging risk and may result in changes in optimal hedging levels. This study provides an estimate of feeder cattle hedge ratios associated with the new cash-settled feeder cattle futures contract and compares the levels of hedging risk present under the cash settled contract with the physical delivery contract. Hedging risks are compared for several weights of feeder steers and heifers and are analyzed across four market locations. Results indicate that hedging risk is generally, though not always, lower with cash settlement than under the physical delivery contract specifications.

Keywords: Livestock Production/Industries; Marketing (search for similar items in EconPapers)
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:ags:wjagec:32119

DOI: 10.22004/ag.econ.32119

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