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Factors Affecting Live Cattle Basis


  • Parcell, Joseph L.
  • Schroeder, Ted C.
  • Dhuyvetter, Kevin C.


Cattle producers and beef packers need to understand basis determinants as they develop price expectations and make pricing, hedging, and forward contracting decisions. This study empirically estimated factors explaining variability in monthly fed cattle basis. The five main results regarding live cattle basis are 1) corn price is an important determinant, 2) a change in the value of the Choice-to-Select spread positively affects basis, 3) changes in the levels of captive supplies have no significant statistical or economic impact on basis 4) the June 1995 live cattle futures contract did not impact basis, and 5) both market fundamentals and seasonal components are important basis determinants.

Suggested Citation

  • Parcell, Joseph L. & Schroeder, Ted C. & Dhuyvetter, Kevin C., 2000. "Factors Affecting Live Cattle Basis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(3), pages 1-11, December.
  • Handle: RePEc:ags:joaaec:15319
    DOI: 10.22004/ag.econ.15319

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    References listed on IDEAS

    1. Kastens, Terry L. & Jones, Rodney D. & Schroeder, Ted C., 1998. "Futures-Based Price Forecasts For Agricultural Producers And Businesses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-14, July.
    2. Ward, Clement E. & Koontz, Stephen R. & Schroeder, Ted C., 1998. "Impacts From Captive Supplies On Fed Cattle Transaction Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-21, December.
    3. Walburger, Allan M. & Foster, Kenneth A., 1997. "Assessing The Relationship Between Market Factors And Regional Price Dynamics In U.S. Cattle Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(1), pages 1-12, July.
    4. Shi‐Miin Liu & B. Wade Brorsen & Charles M. Oellermann & Apul L. Farris, 1994. "Forecasting the nearby basis of live cattle," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 14(3), pages 259-273, May.
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    Cited by:

    1. Xiaoli L. Etienne & Mindy L. Mallory & Scott H. Irwin, 2017. "Estimating the cost of pre‐harvest forward contracting corn and soybeans in Illinois before and after 2007," Agribusiness, John Wiley & Sons, Ltd., vol. 33(3), pages 358-377, June.
    2. Russell, Levi A. & Anderson, David P. & Bochat, Matthew T. & Yanta, Brian D. & Paschal, Joe C. & Young, Alan, 2014. "Effects of Brahman Influence on Breeding Female Prices in South Texas," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 191036, Southern Agricultural Economics Association.
    3. Welch, J. Mark & Mkrtchyan, Vardan & Power, Gabriel J., 2009. "Predicting the Corn Basis in the Texas Triangle Area," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 27(1-2), pages 1-15.
    4. Burdine, Kenneth H. & Meyer, A. Lee & Maynard, Leigh J., 2004. "Understanding the Market for Holstein Steers," Staff Papers 37873, University of Kentucky, Department of Agricultural Economics.
    5. Schroeder, Ted C. & Yang, Xiaolou, 2001. "Hedging Wholesale Beef Cuts," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36091, Western Agricultural Economics Association.
    6. Schumacher, Stephanie & Peel, Derrell S. & Raper, Kellie Curry, 2013. "Non-Adoption of Best Management Practices: Demographics and Adoption Constraints of Oklahoma Cattle Producers," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143094, Southern Agricultural Economics Association.
    7. Abahana, Zelalem & Diersen, Matthew A. & Li, Jing & Klein, Nicole L., 2010. "Fed Cattle Forward Contract Volume and Basis Relationship," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61150, Agricultural and Applied Economics Association.
    8. Burdine, Kenneth H. & Maynard, Leigh J. & Halich, Greg, "undated". "Factors Affecting Feeder Cattle Prices in the Southeast," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142976, Southern Agricultural Economics Association.

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    Livestock Production/Industries; Marketing;


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