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A Prehedging Strategy For The Feedlot Operation

Author

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  • Spahr, Ronald W.
  • Sawaya, William J.

Abstract

During recent years, the feeder cattle industry has experienced financial instability. This paper provides a possible marketing strategy that may help reduce this financial instability by providing a Prehedging Strategy for the feedlot operator. The Prehedging Strategy establishes a dynamic hedge on the major factors of production of the feed lot operator and is shown to provide higher average returns and lower financial risk.

Suggested Citation

  • Spahr, Ronald W. & Sawaya, William J., 1981. "A Prehedging Strategy For The Feedlot Operation," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(1), pages 1-12, July.
    • Handle: RePEc:ags:wjagec:32076
    DOI: 10.22004/ag.econ.32076
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    File URL: https://ageconsearch.umn.edu/record/32076/files/06010031.pdf
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    References listed on IDEAS

    as
    1. Menzie, Elmer L. & Archer, Thomas F., 1972. "Hedging as a Marketing Tool for Western Cattle Feeders," WAEA/ WFEA Conference Archive (1929-1995) 323734, Western Agricultural Economics Association.
    2. Heifner, Richard G., 1972. "Optimal Hedging Levels and Hedging Effectiveness in Cattle Feeding," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 24(2), pages 1-14, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Cady, David Walter, 1987. "Analysis of hedging strategies for southern Iowa stocker operations," ISU General Staff Papers 1987010108000017567, Iowa State University, Department of Economics.
    2. Duncan, Steven Scott, 1988. "The relevant forecast of variance of income for marketing decisions under uncertainty," ISU General Staff Papers 198801010800009839, Iowa State University, Department of Economics.
    3. Ziehm, William Walter, 1986. "An evaluation of alternative hedging strategies for Iowa cattle feeders: before, at, and after placement, 1974-1984," ISU General Staff Papers 1986010108000018118, Iowa State University, Department of Economics.
    4. Tabesh, Hamid, 1987. "Hedging price risk to soybean producers with futures and options: a case study," ISU General Staff Papers 1987010108000010306, Iowa State University, Department of Economics.
    5. Nicolás Acevedo Vélez, 2007. "The cattle crush strategy: trading opportunities for cattle producers," Revista Ecos de Economía, Universidad EAFIT, October.
    6. Kenyon, David E. & Harrington, David H., 1983. "Hedging strategies and farm marketing and financial risks," Agricultural Outlook Forum Archive 1923 - 1997 326150, United States Department of Agriculture, Agricultural Outlook Forum.
    7. Ted C. Schroeder & Orlen C. Grunewald & Scott A. Langemeier & Del M. Allen, 1989. "An analysis of live cattle option hedging strategies," Agribusiness, John Wiley & Sons, Ltd., vol. 5(2), pages 153-168.

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    More about this item

    Keywords

    Livestock Production/Industries; Marketing;

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