Library

How Often Can Cattle Feeders Hedge a Profit with Futures?

Summary

Cattle feedlots face significant market risk during each feeding period. Research on Midwest feedlots has indicated that approximately 74 percent of the variation in cattle feeding returns is due to changes in the prices of fed cattle, feeder cattle, and corn, while approximately 10 percent of the profit variation is due to production risk from average daily gain and feed efficiency.