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Improving wholesale beef and pork product cross hedging

Author

Listed:
  • Marvin L. Hayenga

    (Dept. of Economics, Heady Hall, Iowa State University, Ames, IA 50011-1070)

  • Bingrong Jiang

    (Dept. of Economics, Heady Hall, Iowa State University, Ames, IA 50011-1070)

  • Sergio H. Lence

    (Dept. of Economics, Heady Hall, Iowa State University, Ames, IA 50011-1070)

Abstract
This study examines possible causes for the poor performance that has characterized the forward pricing and hedging practices used by participants in meat processing and merchandising operations. Alternative methods of managing price risk or meat merchandisers are presented and evaluated. The empirical analysis suggests pork and beef slaughter firms and merchandisers should seriously consider using more sophisticated cross hedge models to improve upon the poor performance of some forward contracting and hedging programs currently in use. © 1996 John Wiley & Sons, Inc.

Suggested Citation

  • Marvin L. Hayenga & Bingrong Jiang & Sergio H. Lence, 1996. "Improving wholesale beef and pork product cross hedging," Agribusiness, John Wiley & Sons, Ltd., vol. 12(6), pages 541-559.
    • Handle: RePEc:wly:agribz:v:12:y:1996:i:6:p:541-559
    DOI: 10.1002/(SICI)1520-6297(199611/12)12:6<541::AID-AGR4>3.0.CO;2-3
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    References listed on IDEAS

    as
    1. Robert J. Myers & Stanley R. Thompson, 1989. "Generalized Optimal Hedge Ratio Estimation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 858-868.
    2. Anderson, Ronald W & Danthine, Jean-Pierre, 1981. "Cross Hedging," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1182-1196, December.
    3. Marvin L. Hayenga & Dennis D. DiPietre, 1982. "Cross-Hedging Wholesale Pork Products Using Live Hog Futures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 747-751.
    4. Hayenga, Marvin L. & DiPietre, Dennis D., 1982. "Hedging Wholesale Meat Prices: Analysis of Basis Risk," Staff General Research Papers Archive 11306, Iowa State University, Department of Economics.
    5. Hayenga, Marvin L. & DiPietre, Dennis D., 1982. "Cross-Hedging Wholesale Pork Products Using Live Hog Futures," Staff General Research Papers Archive 11305, Iowa State University, Department of Economics.
    6. Ederington, Louis H, 1979. "The Hedging Performance of the New Futures Markets," Journal of Finance, American Finance Association, vol. 34(1), pages 157-170, March.
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    Cited by:

    1. Rahman, Shaikh Mahfuzur & Turner, Steven C. & Costa, Ecio de Farias, 2001. "Cross-Hedging Cottonseed Meal," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 19(2), pages 1-9.
    2. Costa, Ecio de Farias & Turner, Steven C., 2001. "Price Risk Management For Peanut Meal," Faculty Series 16656, University of Georgia, Department of Agricultural and Applied Economics.
    3. Mark R. Manfredo & Dwight R. Sanders, 2004. "The forecasting performance of implied volatility from live cattle options contracts: Implications for agribusiness risk management," Agribusiness, John Wiley & Sons, Ltd., vol. 20(2), pages 217-230.
    4. Schroeder, Ted C. & Yang, Xiaolou, 2001. "Hedging Wholesale Beef Cuts," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36091, Western Agricultural Economics Association.

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