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Identifying and Managing Economic Risk in Cattle Feeding

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  • Mark, Darrell R.
  • Jones, Rodney

Abstract

Closeout data from two western Kansas commercial feedlots are examined to determine how cattle prices, feed costs, and animal performance impact the variability of cattle feeding profits. The relative impacts of these factors are studied across sex, placement weight, and placement month. Fed and feeder cattle prices have the largest impact on profitability. Corn prices, interest rates, and animal performance have smaller, yet relevant effects on profits. Generally, all these factors influence steer profits more than heifer profits. As placement weight increases, feeder cattle prices impact profitability more while corn prices, interest rates, and animal performance influence profitability less. Feeder cattle prices impact profitability greater for spring and fall placements. Animal performance affects cattle feeding profits greater for winter placements. Results suggest that fed cattle and feeder cattle prices should be emphasized in managing the overall risk in cattle feeding because they are the largest contributors to profit variability.

Suggested Citation

  • Mark, Darrell R. & Jones, Rodney, 1999. "Identifying and Managing Economic Risk in Cattle Feeding," 1981-1999 Conference Archive 285742, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:nc8191:285742
    DOI: 10.22004/ag.econ.285742
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    References listed on IDEAS

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    1. Langemeier, Michael R. & Schroeder, Ted C. & Mintert, James R., 1992. "Determinants Of Cattle Finishing Profitability," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(2), pages 1-7, December.
    2. Jones, Rodney & Mintert, James & Langemeier, Michael & Schroeder, Ted, 1996. "Sources of Economic Variability in Cattle Feeding," 1981-1999 Conference Archive 285662, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    3. E. R. Swanson & V. I. West, 1963. "Statistical Analysis of Feeder Cattle Returns," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 45(1), pages 146-150.
    4. Steven T. Buccola, 1980. "An Approach to the Analysis of Feeder Cattle Price Differentials," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 574-580.
    5. Trapp, James N. & Clevel, Shelia D., 1989. "An Analysis of the Sources of Profit Volatility in Cattle Feeding," 1981-1999 Conference Archive 285511, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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