Photocopy of typescript. / Thesis (Ph. D.)--University of Hawaii at Manoa, 1980. / Bibliography: leaves [127]-129. / Microfiche. / viii, 129 leaves, bound 28 cm

Call number: LD2668 .T4 1932 F61

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. / Graduation date: 1981

Digitized by Kansas Correctional Industries

Digitized by Kansas Correctional Industries

Anderson established a three variable multiple regression model to explain the variation in the monthly seasonally adjusted price of Choice slaughter steers at Chicago from 1955 through 1960 (R²=.9955). This study was devoted to further investigation of beef cattle prices and factors influencing them. The same basic model was used with 1955 through 1961 data to explain Choice (R²=.9822) and Good (R²=.9919) steer prices at Chicago. However, before the relationship between price and the three predictor variables could be used for forecasting, each of the predictor variables had to be estimated. The three predictor variables investigated were fed cattle for slaughter, non-fed cattle for slaughter, and total personal income. Each was expressed on a per capita basis, thus requiring that population also be estimated. Total cattle slaughter was estimated from the inventory for the previous year. Beef cattle marketings were estimated by two different methods. Annual marketings of non-fed cattle for slaughter were obtained as residuals by subtracting predicted fed marketings from predicted total cattle slaughter. A bi-monthly index was used to distribute the marketings throughout the year. Total personal income per capita was predicted on a monthly basis as a function of time. Monthly population increases were estimated from past average monthly increases. Predicted fed and non-fed cattle were divided by the estimated population and expressed on a per capita basis. Monthly seasonally adjusted prices of Choice and Good steers were predicted over the period used to construct the model. The prediction equation was able to explain approximately 84 and 88 percent of the variation in the seasonally adjusted average monthly prices of Choice and Good steers, respectively. The models developed in this investigation should prove useful for the entrepreneur. However, it is important that the user of the models recognize their limitations and adjust them according to his current economic environment. / M.S.

Graduation date: 1971

No description available.

The closure of the US border to Canadian live cattle and beef products after the confirmation of a single Canadian BSE case in May, 2003 seriously jeopardized the Canadian beef cattle industry, which had relied heavily on exports. The inventory of cattle rapidly increased and farmers were paid record low prices for live cattle. But at the same time, the cattle slaughtering industry experienced a substantial increase in profits. The enlarged price spread between the value of live cattle and beef steak raised concerns about oligopsony market power in the live cattle market. This thesis investigates the hypothesis that the Canadian slaughtering industry exercised this market power in the months following the discovery of BSE. Two models, the conjectural variation model from the New Empirical Industrial Organization and an asymmetric price transmission model were used and the results from both models do not support the hypothesis of oligopsony market power.