Routine Hedging of Corn 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

Several corn hedging scenarios involving a combination of cash and futures market transactions were evaluated for calf-fed and yearling production systems. All yearling corn hedging scenarios assessed were effective in only slightly reducing profit risk, while the calf-fed corn hedging scenario actually increased profit risk. Calf-fed and yearling corn hedging scenarios generally generated positive average returns to hedging by lowering net corn prices. The yearling corn hedging scenarios initiated closer to feedlot placement were associated with greater average profits as compared to those hedges initiated when yearlings were initially purchased.