Recent changes in the feeder cattle futures contract specifications are expected to reduce hedging risk and may result in changes in optimal hedging levels. This study provides an estimate of feeder cattle hedge ratios associated with the new cash-settled feeder cattle futures contract and compares the levels of hedging risk present under the cash settled contract with the physical delivery contract. Hedging risks are compared for several weights of feeder steers and heifers and are analyzed across four market locations. Results indicate that hedging risk is generally, though not always, lower with cash settlement than under the physical delivery contract specifications.
One of the difficulties faced by agricultural economic price analysts is the great variety of subclasses identifiable within commodity categories. Beef cattle price analysts face a particularly difficult problem in this regard. In addition to spatial, temporal, grade, and variety distinctions inherent in most agricultural commodities, cattle markets often discriminate sharply on the basis of weight, age, and sex. Most feeder cattle demand, supply, or price studies focus on a representative steer or heifer defined by an explicit set of characteristics that remains invariant across the data set (Maki). Readers are left to draw inferences for other sets of characteristics. Considerable attention has been
Berzelius failed to make use of Faraday's electrochemical laws in his laborious determination of equivalent weights.