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Feeder Cattle Price Slides

Author

Listed:
  • Brorsen, B. Wade
  • Coulibaly, Nouhoun
  • Richter, Francisca G. C.

Abstract

A theoretical model is developed to explain the economics of determining price slides for feeder cattle. The contract is viewed as a dynamic game with continuous strategies where buyer and seller are the players. We determine the value of the slide that assures subgame perfect equilibrium when the seller gives an unbiased estimate of cattle weight. An empirical model using Superior Livestock Auction (SLA) data shows that price slides used are smaller than those needed to cause the producer to give unbiased estimates of weight. Consistent with the model's predictions, producers slightly underestimate cattle weights.

Suggested Citation

  • Brorsen, B. Wade & Coulibaly, Nouhoun & Richter, Francisca G. C., 1999. "Feeder Cattle Price Slides," 1981-1999 Conference Archive 285739, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:nc8191:285739
    DOI: 10.22004/ag.econ.285739
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    1. is not listed on IDEAS
    2. Kastens, Terry L. & Schroeder, Ted C., 1993. "Expectations of Cattle Feeding Investors in Feeder Cattle Placements," Staff Papers 118159, Kansas State University, Department of Agricultural Economics.
    3. Maples, Joshua G. & Harri, Ardian & Riley, John Michael & Tack, Jesse B., 2013. "Marketing Margins and Input Price Uncertainty," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150604, Agricultural and Applied Economics Association.
    4. Kastens, Terry L. & Schroeder, Ted C., 1994. "Cattle Feeder Behavior And Feeder Cattle Placements," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-12, December.
    5. Burdine, Kenneth H. & Maynard, Leigh J. & Halich, Greg, 2013. "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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