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Factors Affecting Live Cattle Basis

Published online by Cambridge University Press:  28 April 2015

Joe L. Parcell ,
Ted C. Schroeder  and
Kevin C. Dhuyvetter
Joe L. Parcell
Affiliation:
Department of Agricultural Economics, University of Missouri
Ted C. Schroeder
Affiliation:
Department of Agricultural Economics, Kansas State University
Kevin C. Dhuyvetter
Affiliation:
Department of Agricultural Economics, Kansas State University
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Abstract

Cattle producers and beef packers need to understand basis determinants as they develop price expectations and make pricing, hedging, and forward contracting decisions. This study empirically estimated factors explaining variability in monthly fed cattle basis. The five main results regarding live cattle basis are 1) corn price is an important determinant, 2) a change in the value of the Choice-to-Select spread positively affects basis, 3) changes in the levels of captive supplies have no significant statistical or economic impact on basis, 4) the June 1995 live cattle futures contract did not impact basis, and 5) both market fundamentals and seasonal components are important basis determinants.

Keywords

basisfed cattlecattle prices
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 32 , Issue 3 , December 2000 , pp. 531 - 541
Copyright
Copyright © Southern Agricultural Economics Association 2000

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