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Cross Hedging Australian Cattle

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  • Blank, Steven C.

Abstract

A major part of Australian cattle trade takes place in markets for animals which do not meet the specifications for the trade steer contract. However, producers, processors and marketers of cattle which are nondeliverable on the futures market may be able to make use of the futures market through the process of cross hedging. The aim is to determine whether or not various types of Australian cattle could, in fact, have been cross hedged successfully in the past using the existing Australian cattle futures contracts. Cross hedging is evaluated over time, space and product form to assess the potential for cross hedging that has existed since the Sydney Futures Exchange's cattle contract was first offered for trading. No attempt will be made to identify 'optimal' cross-hedging strategies. The specifications of the trade steer contract have changed over time. When first introduced in July 1975 the contract was labelled 'futures type steers'. Prior to 1 July 1977 the contract called for carcass deliveries. Since that date, live deliveries have been made, hence the references to 'live cattle' contracts in the literature. Due to this change in specifications, data from live delivery markets only were used in this analysis.

Suggested Citation

  • Blank, Steven C., 1984. "Cross Hedging Australian Cattle," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 28(2-3), pages 1-10, August.
    • Handle: RePEc:ags:ajaeau:22433
    DOI: 10.22004/ag.econ.22433
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    References listed on IDEAS

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    Cited by:

    1. Zainudin, Ahmad Danial & Mohamad, Azhar, 2021. "Cross hedging with stock index futures," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 128-144.
    2. Zura Kakushadze & Juan Andrés Serur, 2018. "151 Trading Strategies," Springer Books, Springer, number 978-3-030-02792-6, October.
    3. Blank, Steven C., 1989. "Research On Futures Markets: Issues, Approaches, And Empirical Findings," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-14, July.

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