The name is absent

1.  Omaha ............+.76

2.  Kentucky .......  +.69

3.  Georgia ............+.58

4.  SouthernPlains .........+.72

While the differences between these coefficients were
not large, such differences as did exist were amplified
by a multiplier of 2 and were primarily responsible
for differences in hedging revenue variances among
markets. As was to be expected, Omaha had the
highest correlation coefficient, indicative of its
delivery point status.

It is another covariance term which explains the
low variance for the 21-week hedge in the Southern
Plains. The covariance between cash prices and prices
for hedges placed 21 weeks previously, Covar (Pj_t,
Sj_m), ɪŋ this market was negative and sufficiently

large to reduce revenue variance to a level equal to
that at Omaha. It seems perverse to find that what
amounts to a negative price forecast will reduce
variance and so improve hedging effectiveness, but it
is nevertheless so.² This seeming quirk may explain
the disparity between Heifnefs results and the
findings of this study with respect to the Southern
Plains market. Heifner found little difference in
hedging effectiveness between Omaha and the
Southern Plains, but he assumed a 4-month hedge
which was terminated prior to the delivery month [3,
p. 22]. Thus, Heifnefs hedge placements were at
about the same point in time as in the 21-week hedge
used in this study. Little is known about the behavior
of choice steer futures prices over the life of a
contract, but it is conceivable that length of hedge