Marketing Strategies in the Canadian Beef Sector

Julieta Frank and Derek Brewin

No 285342, 2011 Conference, April 18-19, 2011, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: The Canadian beef sector has undergone a structural change since the outbreak of BSE in 2003 and a higher U.S./Canadian dollar exchange rate variability. Hedging beef prices and the U.S. dollar using the futures market may help producers and other beef market participants to alleviate some of their price risk. We assess the hedging usefulness of the CME Group futures contract in total price risk reduction for Canadian cattle market participants and we examine the implications of exchange rate variability on optimal commodity hedging. Futures hedging after BSE removes approximately 35% of the risk, and a combined commodity and currency hedge after BSE was discovered removes approximately 50% of the risk. Hedge ratios are in general low, approximately 0.29 when a combined cattle-currency hedge is performed.

Keywords: Marketing (search for similar items in EconPapers)
Date: 2011-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccc11:285342

DOI: 10.22004/ag.econ.285342

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