Captive supplies and cash market prices for fed cattle: The role of delivery timing incentives
AbstractThe use of non-cash methods of procuring fed cattle for slaughter has led to concern about the effect of these so-called “captive” supplies on cash market prices. Some empirical evidence suggests that there is a negative short-run relationship between the two: Cash market prices tend to be low in weeks in which captive supply shipments are high. We advance a different perspective on the relationship between captive deliveries and cash prices, arguing that the incentives that influence cattle delivery-scheduling decisions could lead to a negative relationship, not between the contemporaneous levels of captive shipments and price, but between the volume of captive deliveries, on the one hand, and an ex ante expectation of a week-to-week price change, on the other. Econometric testing provides some evidence of this empirical regularity in the cattle procurement activities of four large packing plants in Texas in the mid-1990s. [EconLit citations: Q130, L140.] Â© 2004 Wiley Periodicals, Inc. Agribusiness 20: 347-362, 2004.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Agribusiness.
Volume (Year): 20 (2004)
Issue (Month): 3 ()
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Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297
Other versions of this item:
- Schroeter, John R. & Azzam, Azzeddine M., 2004. "Captive Supplies and Cash Market Prices for Fed Cattle: The Role of Delivery Timing Incentives," Staff General Research Papers 11159, Iowa State University, Department of Economics.
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