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Relationships among Prices across Alternative Marketing Arrangements for Fed Cattle and Hogs

Author

Listed:
  • Lee, Yoonsuk
  • Ward, Clement E.
  • Brorsen, B. Wade

Abstract

Reduced reliance on cash market prices for fed cattle and hogs raise questions about the role of cash prices in price discovery. We use seven years of weekly data from mandatory price reports to determine whether or not cash market prices are cointegrated with other procurement prices and then test for causality among the price series. Cash prices were cointegrated with all but one procurement price series. Cash market prices Granger cause all other procurement prices. Bidirectional causality was found in some but not all cases. Thus, cash market prices remain of central importance in price discovery for fed cattle and hogs.

Suggested Citation

  • Lee, Yoonsuk & Ward, Clement E. & Brorsen, B. Wade, 2010. "Relationships among Prices across Alternative Marketing Arrangements for Fed Cattle and Hogs," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56282, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea10:56282
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    File URL: http://purl.umn.edu/56282
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    References listed on IDEAS

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    1. Hunnicutt, Lynn & Bailey, DeeVon & Crook, Michelle, 2004. "Rigidity in Packer-Feedlot Relationships," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(03), December.
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    3. Bailey, DeeVon & Brorsen, B. Wade, 1989. "Price Asymmetry In Spatial Fed Cattle Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(02), December.
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    8. Saghaian, Sayed H. & Hasan, Mohamad F. & Reed, Michael R., 2002. "Overshooting Of Agricultural Prices In Four Asian Economies," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(01), April.
    9. Muth, Mary K. & Liu, Yanyan & Koontz, Stephen R. & Lawrence, John D., 2008. "Differences in Prices and Price Risk Across Alternative Marketing Arrangements Used in the Fed Cattle Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(01), April.
    10. repec:ags:joaaec:v:36:y:2004:i:3:p:627-638 is not listed on IDEAS
    11. Pendell, Dustin L. & Schroeder, Ted C., 2006. "Impact of Mandatory Price Reporting on Fed Cattle Market Integration," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(03), December.
    12. Xiaoyong Zheng & Tomislav Vukina, 2009. "Do Alternative Marketing Arrangements Increase Pork Packers' Market Power?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 250-263.
    13. Milton S. Boyd & B. Wade Brorsen, 1985. "Dynamic Relationship of Weekly Prices In the United States Beef and Pork Marketing Channels," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 33(3), pages 331-342, November.
    14. John Crespi & Richard Sexton, 2005. "A Multinomial Logit Framework to Estimate Bid Shading in Procurement Auctions: Application to Cattle Sales in the Texas Panhandle," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(3), pages 253-278, November.
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    Cited by:

    1. Franken, Jason R.V. & Parcell, Joseph L. & Tonsor, Glynn T., 2011. "Impact of Mandatory Price Reporting on Hog Market Integration," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 43(02), May.

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