Econometric Model of the PNW Beef Industry PDF Download
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Author: C. W. Johnson
Publisher:
ISBN:
Category : Beef industry
Languages : en
Pages : 34
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Book Description
Author: C. W. Johnson
Publisher:
ISBN:
Category : Beef industry
Languages : en
Pages : 34
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Book Description
Author: Christopher William Johnson
Publisher:
ISBN:
Category : Beef cattle
Languages : en
Pages : 336
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Author: Cynthia Ann Vanderpool
Publisher:
ISBN:
Category : Beef cattle
Languages : en
Pages : 200
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Book Description
Fluctuating feeder cattle prices have a direct affect on the revenue variability of feeder cattle producers. Hedging in the commodity futures market is a marketing strategy which can, if properly used, reduce the financial risk of feeder cattle producers. If the closing basis value is known when a hedge is placed, a price can be established for the feeder cattle in advance. This fact prompted research in determining the factors which affect nearby feeder cattle basis in the Pacific Northwest. This research is an attempt to identify factors which influence the feeder cattle basis through their influence on the prices which compose the basis -i.e., the cash and futures prices. The feeder cattle cash price has been established as a function of the factors affecting the profit of feedlot operations. Controversy exists on the factors which influence the futures price of livestock products; however, the use of technical indicators is well established in the literature. For the purposes of this research feeder cattle basis is developed as a function of the profit factors and a lag-trend indicator along with dummy variables which influence feeder cattle futures contracts over time. The profit factors include expected slaughter price, corn price, and interest rate values. These profit factors are expected to influence the cash price of feeder cattle. The lag-trend indicator is a calculated trend of the basis over the past two time periods and is expected to represent the analysis made by traders in both the futures and cash markets of past events or prices. This analysis by traders in the futures market will be similar to their use of technical indicators. In specifying the model, two methods of analyzing the expected affects of the profit factors on the basis are acknowledged. In this research, the profit factors are assumed to influence only the cash price. Therefore, the effect of the factors on basis is hypothesized by making assumptions about the price movement of the feeder cattle futures price. The analyses produce various hypotheses about the expected effects of the profit factors on basis. The empirical results produce evidence that the estimated equations explain a good proportion of the Pacific Northwest basis of feeder cattle for light and heavy weight categories. After a close analysis of the profit factors, corn price is concluded to have a positive influence on 500-600 pound feeder cattle basis and a negative influence on 700-800 pound feeder cattle basis. However, due to the inability of the methods to hypothesize the effect of slaughter price on basis and/or to hypothesize, with consistency, the correct signs of the estimated interest rate coefficient, conclusions are not made about their influences on the basis. Feeder cattle producers can apply the information produced in this research in making hedging decisions. However, a thorough knowledge and analysis of hedging theory and market conditions should be undertaken first. Since a predicted closing basis is needed by feeder cattle producers to establish a "locked-in" cash price, further research in developing a forecasting model of feeder cattle basis is warranted.
Author: Lapodini Atouga
Publisher:
ISBN:
Category : Beef industry
Languages : en
Pages : 460
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Author: United States. General Accounting Office
Publisher:
ISBN:
Category : Beef
Languages : en
Pages : 172
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Author: Kenneth Alan Foster
Publisher:
ISBN:
Category :
Languages : en
Pages : 442
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Author: Stephen Paul Reed
Publisher:
ISBN:
Category : Beef cattle
Languages : en
Pages : 258
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Book Description
The cattle industry in the Pacific Northwest is characterized by a large number of producers. Individual contributions to the market have little effect in moderating potential fluctuations in the prices received for the various classes of cattle. Price volatility is of constant concern to producers in planning future production, with decisions made in the current period affecting future profitability of the enterprise. Information that will assist in developing strategies to deal with this uncertainty may play a critical role in reducing the risk of continued production. Inherent to this decision making process is a knowledge of the various factors influencing both biological parameters and economic conditions at a future point in time. The econometric models developed in this study attempt to quantify the economic relationships at the farm level, that affect the price received for the live animal. The economic relationships deemed important in this study are the factors influencing the demand and supply of beef cattle. The supply and demand relationships at the feedlot level are included in a model with coefficients estimated to reflect the individual influence of each variable on the price of slaughter steers for the quarter. A necessary condition of this price formulation process is that current supply and demand levels determine current prices. The slaughter steer prices estimated in this procedure are developed to reflect the fluctuations in the Omaha market. This particular location is considered to more accurately reflect the aggregate data for the U.S. used in the price prediction model. The same strategy of using the Omaha market to reflect U.S. aggregated data is employed in developing a model to forecast utility cow prices. The transition to regional price models for the Northwest was accomplished with little difficulty because of the close historical relationship between the two regions. This characteristic was specified in the Northwest steer and cow price models by including the Omaha price for the quarter as the determinant of prices in Oregon and Washington. Forecasted prices from one and two quarter Omaha steer and cow price models were then used in estimating future Northwest prices. The steer prices estimated in this study compared favorably with price forecasting models from seven other sources evaluated by Just and Rausser (1981). Using the percent root mean square error statistic as a method of comparison, the values from their study ranged between 9.9 and 12.9 for a one quarter forecast, and 12.4 and 18.9 for a two quarter projection. The percent root mean square error calculated for Northwest steer price forecasts was 10.09 for the one quarter estimates and 11.08 for the two quarter projections. These results proved promising in developing future price projections. The inclusion of this modeling process, as a management tool in developing s-hort run production strategies, may be used advantageously in reducing the risk and uncertainty associated with the price fluctuations in the live cattle market.
Author: Raymond J. Folwell
Publisher:
ISBN:
Category : Cattle trade
Languages : en
Pages : 74
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Author: Gustavo A. Nores
Publisher:
ISBN:
Category : Beef industry
Languages : en
Pages : 302
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Author:
Publisher:
ISBN:
Category : Agriculture
Languages : en
Pages : 486
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