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Expectations of Cattle Feeding Investors in Feeder Cattle Placements

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  • Kastens, Terry L.
  • Schroeder, Ted C.

Abstract

Cattle feeders appear irrational when they place cattle on feed when projected profits are negative. Long futures positions appear to offer superior returns to cattle feeding investment. Cattle feeder behavior suggests that they believe a downward bias in live cattle futures persists and that cattle feeders use different information than the live cattle futures market price when making placement decisions. This paper examines feeder cattle placement determinants and compares performance of expected hedgeable profits with past actual profits in explaining feeder cattle' placements. Past actual profits are found to be more important placement determinants than expected profits based upon the live cattle futures market, even though hedgeable profits provide superior forecasts of future profits.

Suggested Citation

  • Kastens, Terry L. & Schroeder, Ted C., 1993. "Expectations of Cattle Feeding Investors in Feeder Cattle Placements," Staff Papers 118159, Kansas State University, Department of Agricultural Economics.
    • Handle: RePEc:ags:ksaesp:118159
    DOI: 10.22004/ag.econ.118159
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    References listed on IDEAS

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    Keywords

    Livestock Production/Industries;

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