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Adding Weight to a Thinning Live Cattle Market

Author

Listed:
  • Gary W. Brester
  • Kole Swanser
  • Brett Crosby

Abstract

Many segments of the beef cattle industry have raised concerns that the live cattle negotiated market has become too thin. The percentage of live cattle procured through direct negotiations has declined to about 15%, while the percentage procured through formulas has increased to almost 70%. Most of these formulas are based on negotiated cattle prices. Proposed legislation mandating that a larger percentage of live cattle be procured through negotiations represents a market intervention. We show that live cattle futures prices are good proxies for negotiated cash prices, while being less restrictive for meeting proposed cattle procurement percentage requirements.

Suggested Citation

  • Gary W. Brester & Kole Swanser & Brett Crosby, 2021. "Adding Weight to a Thinning Live Cattle Market," MSU Staff Papers 310364, Montana State University > Department of Agricultural Economics and Economics.
  • Handle: RePEc:ags:msaesp:310364
    DOI: 10.22004/ag.econ.310364
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    References listed on IDEAS

    as
    1. William G. Tomek, 1980. "Price Behavior on a Declining Terminal Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 434-444.
    2. Zeileis, Achim & Leisch, Friedrich & Hornik, Kurt & Kleiber, Christian, 2002. "strucchange: An R Package for Testing for Structural Change in Linear Regression Models," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 7(i02).
    3. Zeileis, Achim & Kleiber, Christian & Kramer, Walter & Hornik, Kurt, 2003. "Testing and dating of structural changes in practice," Computational Statistics & Data Analysis, Elsevier, vol. 44(1-2), pages 109-123, October.
    4. Zeileis, Achim, 2004. "Econometric Computing with HC and HAC Covariance Matrix Estimators," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 11(i10).
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    Keywords

    Agribusiness; Livestock Production/Industries;

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