HEDGING WHOLESALE BEEF CUTS

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Live cattle futures markets do not offer much opportunity for effective hedging of wholesale beef cuts. If a Choice-to-Select price spread futures contract were introduced this would enhance hedging effectiveness although likely not enough to encourage cross hedging. If a Choice boxed beef futures contract were introduced, hedging Choice wholesale beef cuts would be less risky and the addition of a Choice-to-Select price spread would enhance hedging effectiveness especially for Select wholesale beef cuts.

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