Cross Hedging Cattle Rations Using Corn Futures

Emmett Elam, Wade Donnell

Abstract


The feasibility of cross hedging cattle ration costs using corn futures was investigated. Simulation results for 1985-89 showed that unpredictable variations in ration costs could be reduced up to 54% with cross hedging. The greatest reduction in hedging risk was achieved for longer hedging horizons.

Keywords


cross hedge; cattle ration; corn futures; fed cattle

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