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Factors Affecting Efficiency of Feeder Cattle Hedging in Kentucky

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  • O'Bryan, Stephen L.
  • Bobst, Barry W.
  • Davis, Joe T.

Abstract

Recent commodity price volatility and development of new futures contracts has kindled interest in hedging among farmers in many parts of the country. Due to the importance of feeder cattle production in Kentucky and in the South generally, recent development of a feeder cattle contract is of special interest. This paper addresses some potential problems associated with use of feeder cattle futures markets by Kentucky producers. Specifically, it tries to: (1) determine the effect, if any, of location basis variability on ex post hedging results in Kentucky markets versus delivery markets at Omaha and Oklahoma City, (2) assess the ability of hedging to reduce revenue variability as compared to cash marketing and (3) determining the presence of bias in feeder cattle futures prices.

Suggested Citation

  • O'Bryan, Stephen L. & Bobst, Barry W. & Davis, Joe T., 1977. "Factors Affecting Efficiency of Feeder Cattle Hedging in Kentucky," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 9(1), pages 185-189, July.
    • Handle: RePEc:cup:jagaec:v:9:y:1977:i:01:p:185-189_01
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    Cited by:

    1. Harrison, R. Wes, 1998. "Stochastic Dominance Analysis Of Futures And Option Strategies For Hedging Feeder Cattle," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), pages 1-11, October.
    2. Harrison, R. Wes & Bobst, Barry W. & Benson, Fred J. & Meyer, Lee, 1996. "Analysis Of The Risk Management Properties Of Grazing Contracts Versus Futures And Option Contracts," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(2), pages 1-16, December.
    3. Bobst, Barry W. & Grunewald, Orlen C. & Davis, Joe T., 1982. "Efficient Cash And Hedged Enterprise Combinations In Feeder Calf Backgrounding Operations," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 14(2), pages 1-6, December.

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