Hedging Risk For Feeder Cattle With A Traditional Hedge Compared To A Ratio Hedge
This paper compares hedging risk for various weights of feeder cattle hedged with a traditional cross hedge and a ratio cross hedge. A traditional hedge calls for the purchase/sale of one pound of futures for each pound of cash feeder cattle. By contrast, a ratio hedge requires estimation of a hedge...
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| Veröffentlicht in: | Journal of agricultural and applied economics 1990-12, Vol.22 (2), p.209-216 |
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| container_end_page | 216 |
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| container_title | Journal of agricultural and applied economics |
| container_volume | 22 |
| creator | Elam, Emmett Davis, James |
| description | This paper compares hedging risk for various weights of feeder cattle hedged with a traditional cross hedge and a ratio cross hedge. A traditional hedge calls for the purchase/sale of one pound of futures for each pound of cash feeder cattle. By contrast, a ratio hedge requires estimation of a hedge ratio to determine the number of pounds of futures needed to hedge one pound of cash feeder cattle. Hedge ratios were found to be larger than 1.0 for light-weight feeder cattle. By using the estimated hedge ratios, it was shown that hedging risk could be reduced 20-50 percent compared to that achieved by using a hedge ratio of 1.0. |
| doi_str_mv | 10.1017/S1074070800001954 |
| format | Article |
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A traditional hedge calls for the purchase/sale of one pound of futures for each pound of cash feeder cattle. By contrast, a ratio hedge requires estimation of a hedge ratio to determine the number of pounds of futures needed to hedge one pound of cash feeder cattle. Hedge ratios were found to be larger than 1.0 for light-weight feeder cattle. By using the estimated hedge ratios, it was shown that hedging risk could be reduced 20-50 percent compared to that achieved by using a hedge ratio of 1.0.</description><identifier>ISSN: 1074-0708</identifier><identifier>ISSN: 0081-3052</identifier><identifier>EISSN: 2056-7405</identifier><identifier>EISSN: 0081-3052</identifier><identifier>DOI: 10.1017/S1074070800001954</identifier><language>eng</language><publisher>New York, USA: Cambridge University Press</publisher><subject>basis ; BOVIN ; ESTADOS UNIDOS DE AMERICA ; ETATS UNIS ; feeder cattle ; GANADO BOVINO ; hedge ratio ; hedging risk ; MARCHE A TERME ; MODELE DE SIMULATION ; MODELOS DE SIMULACION ; OPERACIONES A PLAZO ; PESO ; POIDS ; PRECIOS ; PRIX ; ratio cross hedge ; RIESGO ; RISQUE ; traditional cross hedge</subject><ispartof>Journal of agricultural and applied economics, 1990-12, Vol.22 (2), p.209-216</ispartof><rights>Copyright © Southern Agricultural Economics Association 1990</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c2964-5d0348f48d1184c6af04d511fd3c206de804fa6fbc905e8a3833dcf6e5ac4c0f3</citedby><cites>FETCH-LOGICAL-c2964-5d0348f48d1184c6af04d511fd3c206de804fa6fbc905e8a3833dcf6e5ac4c0f3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,776,780,27901,27902</link.rule.ids></links><search><creatorcontrib>Elam, Emmett</creatorcontrib><creatorcontrib>Davis, James</creatorcontrib><title>Hedging Risk For Feeder Cattle With A Traditional Hedge Compared To A Ratio Hedge</title><title>Journal of agricultural and applied economics</title><addtitle>J. Agric. Appl. Econ</addtitle><description>This paper compares hedging risk for various weights of feeder cattle hedged with a traditional cross hedge and a ratio cross hedge. A traditional hedge calls for the purchase/sale of one pound of futures for each pound of cash feeder cattle. By contrast, a ratio hedge requires estimation of a hedge ratio to determine the number of pounds of futures needed to hedge one pound of cash feeder cattle. Hedge ratios were found to be larger than 1.0 for light-weight feeder cattle. By using the estimated hedge ratios, it was shown that hedging risk could be reduced 20-50 percent compared to that achieved by using a hedge ratio of 1.0.</description><subject>basis</subject><subject>BOVIN</subject><subject>ESTADOS UNIDOS DE AMERICA</subject><subject>ETATS UNIS</subject><subject>feeder cattle</subject><subject>GANADO BOVINO</subject><subject>hedge ratio</subject><subject>hedging risk</subject><subject>MARCHE A TERME</subject><subject>MODELE DE SIMULATION</subject><subject>MODELOS DE SIMULACION</subject><subject>OPERACIONES A PLAZO</subject><subject>PESO</subject><subject>POIDS</subject><subject>PRECIOS</subject><subject>PRIX</subject><subject>ratio cross hedge</subject><subject>RIESGO</subject><subject>RISQUE</subject><subject>traditional cross hedge</subject><issn>1074-0708</issn><issn>0081-3052</issn><issn>2056-7405</issn><issn>0081-3052</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1990</creationdate><recordtype>article</recordtype><recordid>eNp9kMtOwzAQRS0EEqXwAbDyDwTGie0kyxLRFFEJ9aV2Z7mxXdxXKjtI8Pc4SsUGidmMNGfu6M5F6J7AIwGSPs0IpBRSyCAUyRm9QL0YGI_ClF2iXoujll-jG--3ADSOWdZDk5FWG3vc4Kn1OzysHR5qrbTDhWyavcZL23zgAZ47qWxj66Pc41ahcVEfTtJphed14FMZYEdu0ZWRe6_vzr2PFsOXeTGKxu_lazEYR1WccxoxBQnNDM0UIRmtuDRAFSPEqKSKgSudATWSm3WVA9OZTLIkUZXhmsmKVmCSPiLd3crV3jttxMnZg3TfgoBoMxF_MgmaqNNY3-ivX4F0O8HTJGWClxOxWq7o81tZijjsP3T7RtZCbpz1YjHLSUyBt8eSswF5WDsbXhfb-tOFiPw_Fn4AcUt40Q</recordid><startdate>19901201</startdate><enddate>19901201</enddate><creator>Elam, Emmett</creator><creator>Davis, James</creator><general>Cambridge University Press</general><scope>FBQ</scope><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>19901201</creationdate><title>Hedging Risk For Feeder Cattle With A Traditional Hedge Compared To A Ratio Hedge</title><author>Elam, Emmett ; Davis, James</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c2964-5d0348f48d1184c6af04d511fd3c206de804fa6fbc905e8a3833dcf6e5ac4c0f3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1990</creationdate><topic>basis</topic><topic>BOVIN</topic><topic>ESTADOS UNIDOS DE AMERICA</topic><topic>ETATS UNIS</topic><topic>feeder cattle</topic><topic>GANADO BOVINO</topic><topic>hedge ratio</topic><topic>hedging risk</topic><topic>MARCHE A TERME</topic><topic>MODELE DE SIMULATION</topic><topic>MODELOS DE SIMULACION</topic><topic>OPERACIONES A PLAZO</topic><topic>PESO</topic><topic>POIDS</topic><topic>PRECIOS</topic><topic>PRIX</topic><topic>ratio cross hedge</topic><topic>RIESGO</topic><topic>RISQUE</topic><topic>traditional cross hedge</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Elam, Emmett</creatorcontrib><creatorcontrib>Davis, James</creatorcontrib><collection>AGRIS</collection><collection>Istex</collection><collection>CrossRef</collection><jtitle>Journal of agricultural and applied economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Elam, Emmett</au><au>Davis, James</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Hedging Risk For Feeder Cattle With A Traditional Hedge Compared To A Ratio Hedge</atitle><jtitle>Journal of agricultural and applied economics</jtitle><addtitle>J. Agric. Appl. Econ</addtitle><date>1990-12-01</date><risdate>1990</risdate><volume>22</volume><issue>2</issue><spage>209</spage><epage>216</epage><pages>209-216</pages><issn>1074-0708</issn><issn>0081-3052</issn><eissn>2056-7405</eissn><eissn>0081-3052</eissn><abstract>This paper compares hedging risk for various weights of feeder cattle hedged with a traditional cross hedge and a ratio cross hedge. A traditional hedge calls for the purchase/sale of one pound of futures for each pound of cash feeder cattle. By contrast, a ratio hedge requires estimation of a hedge ratio to determine the number of pounds of futures needed to hedge one pound of cash feeder cattle. Hedge ratios were found to be larger than 1.0 for light-weight feeder cattle. By using the estimated hedge ratios, it was shown that hedging risk could be reduced 20-50 percent compared to that achieved by using a hedge ratio of 1.0.</abstract><cop>New York, USA</cop><pub>Cambridge University Press</pub><doi>10.1017/S1074070800001954</doi><tpages>8</tpages><oa>free_for_read</oa></addata></record> |
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| identifier | ISSN: 1074-0708 |
| ispartof | Journal of agricultural and applied economics, 1990-12, Vol.22 (2), p.209-216 |
| issn | 1074-0708 0081-3052 2056-7405 0081-3052 |
| language | eng |
| recordid | cdi_istex_primary_ark_67375_6GQ_XWX4BKGG_2 |
| source | AgEcon; Elektronische Zeitschriftenbibliothek - Frei zugängliche E-Journals |
| subjects | basis BOVIN ESTADOS UNIDOS DE AMERICA ETATS UNIS feeder cattle GANADO BOVINO hedge ratio hedging risk MARCHE A TERME MODELE DE SIMULATION MODELOS DE SIMULACION OPERACIONES A PLAZO PESO POIDS PRECIOS PRIX ratio cross hedge RIESGO RISQUE traditional cross hedge |
| title | Hedging Risk For Feeder Cattle With A Traditional Hedge Compared To A Ratio Hedge |
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