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The Impact of Forward Contracting on Fed Cattle Transaction Prices

Author

Listed:
  • Ted C. Schroeder
  • Rodney Jones
  • James Mintert
  • Andrew P. Barkley

Abstract

Beef packers have vertically integrated into the cattle feeding sector. This study examines the impacts of beef packer forward contracting on cash cattle transaction prices in southwest Kansas. From late May through November 1990, average fed cattle cash transaction prices were estimated to be $0.15/cwt to $0.31/cwt lower as a result of forward contract cattle shipments. The impact of the level of forward contracting on cash prices was variable across time: cash prices were as much as $0.34/cwt lower at times when contract shipments were large, and prices were statistically unaffected at times when forward contract shipments were low.

Suggested Citation

  • Ted C. Schroeder & Rodney Jones & James Mintert & Andrew P. Barkley, 1993. "The Impact of Forward Contracting on Fed Cattle Transaction Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(2), pages 325-337.
  • Handle: RePEc:oup:revage:v:15:y:1993:i:2:p:325-337.
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    File URL: http://hdl.handle.net/10.2307/1349452
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