Optimal Hedging Levels and Hedging Effectiveness in Cattle Feeding
Optimal hedging level, minimum-risk hedging level, and hedging effectiveness are defined in a manner consistent with portfolio theory and used to analyze hedging potential in cattle feeding. Estimated upper limits on optimal hedging levels ranged from 0.56 to 0.88 unit of short futures per unit of four types of slaughter cattle produced at five locations. When futures trading costs are taken into account, optimal hedging levels are depressed below these limits, depending upon the resource availabilities and profit expectations of individual firms. Location, grade, and sex of the cattle fed have small effects on optimal hedging levels and hedging effectiveness.
Volume (Year): (1972)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: 1400 Independence Ave.,SW, Mail Stop 1800, Washington, DC 20250-1800|
Web page: http://www.ers.usda.gov/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gum, Russell L. & Wildermuth, John, 1970. "Hedging on the Live Cattle Futures Contract," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 4.
- Richard G. Heifner, 1966. "Determining Efficient Seasonal Grain Inventories: An Application of Quadratic Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(3_Part_I), pages 648-660.
- Leonard J. Haverkamp, 1970. "Potential Developments in Futures Markets of Significance to Agriculture and Related Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(5), pages 842.
- Truman F. Graf, 1953. "Hedging—How Effective Is It?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 35(3), pages 398-413.
- William G. Tomek & Roger W. Gray, 1970. "Temporal Relationships Among Prices on Commodity Futures Markets: Their Allocative and Stabilizing Roles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(3), pages 372-380.
- James Tobin, 1956.
"Liquidity Preference as Behavior Towards Risk,"
Cowles Foundation Discussion Papers
14, Cowles Foundation for Research in Economics, Yale University.
- Ronald W. Ward & Lehman B. Fletcher, 1971. "From Hedging to Pure Speculation: A Micro Model of Optimal Futures and Cash Market Positions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(1), pages 71-78.
- Paul, Allen B. & Wesson, William T., 1967. "Pricing Feedlot Services Through Cattle Futures," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 2.
- Howell, L. D., 1962. "Analysis of Hedging and Other Operations in Wool and Wool Top Futures," Technical Bulletins 170885, United States Department of Agriculture, Economic Research Service.
- Leland L. Johnson, 1960. "The Theory of Hedging and Speculation in Commodity Futures," Review of Economic Studies, Oxford University Press, vol. 27(3), pages 139-151.
- Ronald I. McKinnon, 1967. "Futures Markets, Buffer Stocks, and Income Stability for Primary Producers," Journal of Political Economy, University of Chicago Press, vol. 75, pages 844.
When requesting a correction, please mention this item's handle: RePEc:ags:ueraer:147014. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.