Routine Hedging of Fed Cattle Sales Price for Calf-Fed and Yearling Production Systems

Authors

Rebecca M. Small, University of Nebraska-LincolnFollow
Darrell R. Mark, University of Nebraska-LincolnFollow
Terry J. Klopfenstein Klopfenstein, University of Nebraska-LincolnFollow

Date of this Version

2010

Comments

Published in 2009 Nebraska Beef Cattle Report (Lincoln, NE: December, 2008). Copyright © 2008 The Board of Regents of the University of Nebraska.

Abstract

Short futures hedges in the Chicago Mercantile Exchange live cattle futures contract were evaluated to determine if profit variability could be decreased for calf-fed and yearling production systems. Results indicated standard deviations of calf-fed profits could be reduced by $35-$47/head through routine hedging. Routine hedges of yearling cattle, however, resulted in profit declining nearly $50/head, but profit variability also decreased.