Page 48 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

$80.28 per cwt, compared to $82.67 for 735 lb steers sold in October (BS),

and $84.00 for steers sold in September (RG).
Steer purchase cost and sales revenue are calculated by multiplying

applicable steer weights by purchase and sale prices. Standard deviation (σ)

of steer purchase cost is 104.39 for WH, 121.75 for SS and BS, and 111.14
for RG. Coefficient of variation (COV) for steer purchase cost is .2141,

.2308, .2308, and .2147 for WH, SS, BS, and RG, respectively. The
similarity of the COV for steers purchased in different time periods (fall vs

spring) appears to indicate that little additional purchase price risk is incurred
based on fall versus spring grazing strategies.

Steer sales revenues have σ of 105.11, 133.33, 1121.11, and 1135.85

for WH, SS, BS, and RG, respectively. Coefficients of variation for steer
revenue are .1690 (WH), .2112 (SS), .1993 (BS), and .2156 (RG). The COV

for WH revenue is 78% of that for RG, indicating a substantially lower

relative risk for steer revenue if sold in March after grazing wheat than if
sold at the first of September after grazing rangeland. Correlation

coefficients between purchase cost and sales revenue are .9399, .9256, .9328,
and .9518 for WH, SS, BS and RG respectively. The similarly high

correlations further indicate that relative price risk is not highly related to the
time periods for the chosen scenarios.

Net revenues for steers (NRV) for WH, SS, BS and RG scenarios are

calculated as the difference in sales revenue and purchase cost for steers in
each scenario. The calculation does not include other production costs, and

therefore only provides information about price risk and seasonal differences
in the scenarios. Variation in annual and seasonal precipitation is shown in

Figure 2. This variation is reflected in forage yields, transformed to steer
gain, and reflected in NRV. A correlation of -.4875 is observed between

May-September precipitation and November-March precipitation, suggesting

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