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Profit Maximizing Behavior On the Fed Cattle Grid: The Value of Pre-harvest and Genetic Sorting with Implications for Aggregate Supply


  • Wang, Chia-Hsing
  • Roe, Brian E.


We simulate the growth and quality changes for pens of cattle and derive the value of pre-harvest sorting and genetic selection under grid pricing in a deterministic setting featuring animals with heterogeneous growth and quality maturation paths. The key findings are: 1) both pre-harvest sorting and increased genetic uniformity could substantially affect an individual cattle feeder's net revenues; 2) one could expect higher marginal revenue gains from the genetic uniformity than from pre-market sorting; 3) both methods exhibit diminishing marginal returns and 4) aggregate beef supply may increase as improving uniformity typically leads to later optimal marketing dates and, hence, heavier animals at slaughter.

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  • Wang, Chia-Hsing & Roe, Brian E., 2001. "Profit Maximizing Behavior On the Fed Cattle Grid: The Value of Pre-harvest and Genetic Sorting with Implications for Aggregate Supply," 2001 Annual meeting, August 5-8, Chicago, IL 20611, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea01:20611

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    1. Ward, Clement E. & Feuz, Dillon M. & Schroeder, Ted C., 1999. "Formula Pricing and Grid Pricing Fed Cattle: Implications for Price Discovery and Variability," Staff Papers 232528, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    2. Dillon M. Feuz & Scott W. Fausti & John J. Wagner, 1993. "Analysis of the efficiency of four marketing methods for slaughter cattle," Agribusiness, John Wiley & Sons, Ltd., vol. 9(5), pages 453-463.
    3. Koontz, Stephen R. & Hoag, Dana L. & Walker, Jodine L. & Brethour, John R., 2000. "Returns To Market Timing And Sorting Of Fed Cattle," 2000 Conference, April 17-18 2000, Chicago, Illinois 18930, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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    Livestock Production/Industries;


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