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Understanding and Using Feeder and Slaughter Cattle Basis

James Mintert, Kevin Dhuyvetter, Ernest Davis and, Stan Bevers (March, 2002)

Summary

Knowledge of historical basis patterns can be useful when estimating expected sale or purchase prices at the conclusion of a futures or options hedge, when evaluating a current cash market quote, and when evaluating forecasted cash prices. This fact sheet explains how feeder and slaughter cattle basis is computed, outlines an approach to developing a history of local basis levels, and discusses how historical basis data can be used to forecast basis.