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Feeder Cattle Basis Patterns in North Dakota

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dc.contributor.author Petry, Timothy A.
dc.rights North Dakota State University en
dc.title Feeder Cattle Basis Patterns in North Dakota en
dc.type Article en
dc.source ND Farm Research: Vol. 41, No.6, p. 26-30 en
dc.description A feeder cattle producer considering futures markets hedging as a means of reducing risks from adverse price movements was recommended to 'localize' the futures price due to it's more closely to a local cash market price. The method used to localize or to adjust to the futures market price is referred as the 'basis'. These are calculated by the subtracting a local cash price from the futures market price. When a hedge is placed and futures price is locked in, it's movement in the basis that determines the success of the hedge, rather than changes in the price level. the patterns of feeder cattle basis for North Dakota are broken down into it's components, trends and contexts. Much of the potnetial for the successful hedging of deefer cattle rests on the accurate prediction of what the basis will be on the day the hedge is lifted. Research indicated that relatively wide variations existedd in the day-to-day feeder cattle basis and that prediction of basis values for a particular day is difficult. However. analysis indicated that particular basis patterns do exist and that these can probably be predicted more accurately than cash market prices. Thus, futures market hedging during periods of adverse price movement can be an effective method of reducing price risk.
dc.date.accessioned 2009-07-29T01:30:46Z
dc.date.available 2009-07-29T01:30:46Z
dc.date.issued 2009-07-29T01:30:46Z
dc.identifier.uri http://hdl.handle.net/10365/5568
dc.date 1984 en
dc.subject Cattle en
dc.subject Livestock production en

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