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Fed Cattle Basis: An Updated Overview of Concepts and Applications

Jeremiah McElligott and, Glynn Tonsor (March, 2012)

Summary

Forming expectations of price is important to agricultural producers to enable them to make profitable production and managerial decisions. There are many approaches to forecasting prices. Many agricultural economists agree that basis- adjusted information from futures markets provide the best forecasting approach. This fact sheet discusses fed cattle basis, overviews how historical basis data can be used along with futures market data to aid in forming price expectations, and summarizes recent research on the best approach to forecasting fed cattle basis.