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Usage Determinants of Fed Cattle Pricing Mechanisms

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  • Diersen, Matthew A.
  • Fausti, Scott W.

Abstract

Proposed cattle slaughter facilities in the upper Midwest have renewed interest among feedlot operators in the most appropriate mechanism to use when selling cattle. Buyers are also interested in the mechanisms that may have different benefits and seasonal patterns based on established behavior of other buyers in the region. In this paper we model the shares of fed cattle traded using different pricing mechanisms. The intent is to build a forecasting model of shares considering fundamental factors and seasonality. There is regional variation in the use of mechanisms. A Seemingly Unrelated Regression estimation procedure was used to analyze market shares. More variability of forward pricing and negotiated live pricing methods was explained compared to formula pricing and grid pricing methods.

Suggested Citation

  • Diersen, Matthew A. & Fausti, Scott W., 2012. "Usage Determinants of Fed Cattle Pricing Mechanisms," 2012 Conference, April 16-17, 2012, St. Louis, Missouri 285771, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:n13412:285771
    DOI: 10.22004/ag.econ.285771
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    References listed on IDEAS

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