The impact of forward contracting on fed cattle transaction prices

Beef packers have vertically integrated into the cattle feeding sector. This study examines the impacts of beef packer forward contracting on cash cattle transaction prices in southwest Kansas. From late May through November 1990, average fed cattle cash transaction prices were estimated to be $0.15...

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Bibliographic Details
Published in:Applied economic perspectives and policy 1993-05, Vol.15 (2), p.325-337
Main Authors: Schroeder, Ted C., Jones, Rodney, Mintert, James, Barkley, Andrew P.
Format: Article
Language:English
Subjects:
Beef
Beef cattle
bovin
Cash
cattle
comercio
commerce
comportamiento economico
comportement economique
Contracts
costos
costs
cout
economic behaviour
Feedlots
Forward contracts
ganado bovino
kansas
Market prices
mathematical models
modele mathematique
modelos matematicos
precios de mercado
prix de marche
Shipments
Slaughter
trade
Wholesale prices
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Summary:Beef packers have vertically integrated into the cattle feeding sector. This study examines the impacts of beef packer forward contracting on cash cattle transaction prices in southwest Kansas. From late May through November 1990, average fed cattle cash transaction prices were estimated to be $0.15/cwt to $0.31/cwt lower as a result of forward contract cattle shipments. The impact of the level of forward contracting on cash prices was variable across time: cash prices were as much as $0.34/cwt lower at times when contract shipments were large, and prices were statistically unaffected at times when forward contract shipments were low.
ISSN:1058-7195
2040-5790
1467-9353
2040-5804
DOI:10.2307/1349452