The cattle crush strategy: trading opportunities for cattle producers
Date
Authors
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Altmetrics
Authors
Research Projects
Organizational Units
The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
Dates of Existence
1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
Journal Issue
Is Version Of
Versions
Series
Department
Abstract
This research shows that it is possible for cattle feeders to obtain additional profits if a consistent technical strategy for trading is applied to the cattle crush spread. However, when trading costs are introduced, the likelihood of obtaining profit from trading the crush reduces considerably. It also shows that the level of gains from the cattle crush is related to the month the cattle are marketed. When the crush is used as a hedging strategy it decreases the profit from the feeding operation and reduces the volatility of those returns, helping producers to transfer part of the price risk associated with their production. To provide evidence of these findings, this study utilizes daily prices for 1995 to 2006 of the futures contracts of corn, feeder and live cattle to construct the daily cattle crush spread for two different combination of futures contracts. These contract combinations suppose that cattle are fed in feedlots for 170 days before being marketed in April and in October. Two different scenarios are also evaluated using the cattle crush spread: one in which the crush is employed as a pre-placement hedging tool and another in which the crush is used as a post-placement hedging method.