Analysis of feeder cattle-corn-fed cattle market arbitrage profit opportunities and pricing strategy alternatives Schroeder, Ted
dc.contributor.department Economics 2018-08-16T04:10:18.000 2020-07-02T06:06:03Z 2020-07-02T06:06:03Z Wed Jan 01 00:00:00 UTC 1986 1986
dc.description.abstract <p>The financial risks associated with cattle feeding have increased substantially in recent years. Returns have been highly volatile and frequently low. Cattle feeders have available a number of marketing alternatives which they can use to help reduce price risks for major inputs such as corn and feeder cattle and for the final production of fed cattle. These alternatives include futures markets for these 3 commodities as well as options markets for corn and fed cattle. However, with the numerous marketing alternatives available to the producer the marketing decision can be complex. One tool that can aid the producer in making marketing decisions is price forecasts;Monthly price forecasts were developed for corn, feeder cattle, and fed cattle using several different techniques including: econometric models, ARIMA models, naive forecasts, expert opinion, and composites of these. These forecasts were analyzed both statistically for their accuracy and economically for their ability to signal market transactions that would reduce the risks and increase the profitability associated with cattle feeding. Hedging strategies for corn, feeder cattle, and fed cattle and options strategies for fed cattle were simulated over the July 1978 through 1985 period. The results of a mean-variance analysis indicated that forecast-signaled corn and feeder cattle hedges were able to increase profitability though not decrease variability of returns. Fed cattle forecast-signaled hedging strategies when combined with the feeder cattle and corn hedges resulted in both increased average returns and decreased variability. However, simple profit margin signaled hedges for fed cattle performed slightly better than the forecast-signaled hedges.</p>
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dc.identifier.articleid 9303
dc.identifier.contextkey 6331147
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath rtd/8304
dc.language.iso en
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dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Agriculture
dc.subject.keywords Agriculture--Economic aspects
dc.subject.keywords Economics
dc.title Analysis of feeder cattle-corn-fed cattle market arbitrage profit opportunities and pricing strategy alternatives
dc.type article
dc.type.genre dissertation
dspace.entity.type Publication
relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d dissertation Doctor of Philosophy
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