THE BASIS FOR FEEDER CATTLE, FED CATTLE, AND FED HOGS IN OHIO: A STATISICAL PRESENTATION. Carl Zulauf, Greg Sharp, Brian Watkin's,

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1 ESO 978 THE BASIS FOR FEEDER CATTLE, FED CATTLE, AND FED HOGS IN OHIO: A STATISICAL PRESENTATION by Carl Zulauf, Greg Sharp, Brian Watkin's, and Carl Zinnnerman* October 25, 1982 *Carl Zulauf is assistant professor of Agricultural Economics, The Ohio State University. Greg Sharp is a former undergraduate student at Ohio State. Brian Watkins and Carl Zinnnerman are current undergraduate students, Ohio State.

2 TABLE 1: Nearby Futures - Cash Basis for Feeder Cattle, and ; Kentucky, July June 1982a First Periodb Second Periodb Third Periodb Fourth Periodb Month ($/cwt) January February March April c c May June July August September October November December d d acash price used was the average of the weekly price range for Kentucky feeder cattle market: pound, medium frame no. 2 feeder cattle. Futures prices used were the opening quotes for the nearby futures on Wednesday or the nearest available date. Feeder futures are traded for delivery in January, March, April, May, August, September, October, and November. Because of light trading volume, the January futures prices were not used in the basis calculations. Basis equals futures minus cash. b To allow comparisons across years, the observations were grouped into four periods based on the date of the Wednesday futures. The periods were days 1-7, 8-14, 15-21, and of a month. If two days fell in the period, the average was used as the observation for that weekly period. The nearby futures was changed during the third weekly period of each delivery month. ckentucky feeder cattle report not available for week of April 21-25, d No Kentucky feeder cattle prices were reported for this weekly period in 1979, 1980 and average was calculated. Thus, no

3 Sources: Chicago Mercantile Exchange Yearbook, 1978/ Ohio Federal-State Newsletter, July 1978-June 1982 Wall Street Journal, January 1982-June 1982 v

4 ~ TABLE 2: Nearby Futures - Cash Basis for Fed Cattle, and ; Washington Court House, Ohio, July June 1982a First Periodb Second Periodb Third Periodb Fourth Periodb Month ($/cwt) January c 2.76c February March April May June soc l.85c July -.83c l.53c August September October November -.51d.76d December C 2.6QC a Cash prices used were the high quote on the price range for U.S. choice and prime, Number 2-4, 900 pounds plus slaughter steers. Prices were collected from the Washington Court House, Ohio auction. This auction is held weekly on Tuesdays. Futures prices used were the opening quote for the nearby futures on Tuesdays. Fed cattle futures are traded for delivery in January, February, April, June, August, October and December. Because of light trading volume, the January futures prices were not used in the basis calculations. Basis equals futures minus cash. bto allow comparisons across years, the observations were grouped into four periods. The periods were days 1-7, 8-14, 15-21, and of a month. If two days fell in the period, the average was used as the observation for that weekly period. The nearby futures price was changed during the third weekly period of each delivery month. cdata not available for January 1, 1980; July 4, 1978; and December 25, 1979 because they were holidays. No report from Washington Court House for June 29, 1982 and December 24, Thus, these weeks were excluded from the average. don November 7, 1978 and November 4, 1980; the Chicago Mercantile Exchange was closed for election day. Therefore, the Monday closing futures quote was used as the futures price.

5 Sources: Chicago Mercantile Exchange Yearbook, 1978/ Ohio Federal-State Newsletter, July 1978-June 1982 Wall Street Journal, January 1982-June 1982

6 TABLE 3: Nearby Futures - Cash Basis for Direct Hog Market, and ; Ohio, First Periodb Second Periodb Third Periodb Fourth Periodb Month ($/cwt) January February March April May June July August September October November December acash prices used were the high quote on the price range for U.S. number one and twos, pounds, at country points. Prices were collected only for Friday or nearest available date. Futures prices used were the opening quotes for the nearby futures. Hog futures are traded for delivery in February, April, June, July, August, October, and December. Basis equals futures minus cash. bto allow comparisons across years, the Friday dates were grouped into four periods: days 1-7, 8-14, 15-21, and of a month. If two days fell in the period, the average was used as the observation for that weekly period. The nearby futures price was changed during the third weekly period of each delivery month. Sources: Chicago Mercantile Exchange Yearbook, 1971/ Ohio Federal-State Newsletter,