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Differences in Prices and Price Risk Across Alternative Marketing Arrangements Used in the Fed Cattle Industry

Author

Listed:
  • Muth, Mary K.
  • Liu, Yanyan
  • Koontz, Stephen R.
  • Lawrence, John D.

Abstract

Information on prices and price risk differences across marketing arrangements aids fed cattle producers in making choices about marketing methods. As part of the congressionally mandated Livestock and Meat Marketing Study, we investigated fed cattle price and price risk differences across marketing arrangements. The analysis uses data representing cattle purchased by 29 large beef packing plants from October 2002 through March 2005. Results indicate that marketing agreements offered the best trade-off between price level and price risk. Forward contracts had the lowest average yet highly volatile prices. Auction barn prices were higher than other methods but also the most volatile.

Suggested Citation

  • 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," Staff General Research Papers Archive 12904, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12904
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    Cited by:

    1. Bastian, Christopher T. & Jones Ritten, Chian & Feuz, Bridger & Nagler, Amy M. & Smutko, Steven, 2018. "Can Producers Bargain for Better Prices? Implications from Wyoming Focus Groups," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2018.
    2. Abahana, Zelalem & Diersen, Matthew A. & Li, Jing & Klein, Nicole L., 2010. "Fed Cattle Forward Contract Volume and Basis Relationship," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61150, Agricultural and Applied Economics Association.
    3. Phillips, Owen R. & Bastian, Christopher T. & Cook, Benjamin R. & Menkhaus, Dale J. & Gao, Shen, 2025. "Choice of Auction or Negotiation in Linked Laboratory Markets: Cattle Market Implications," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360827, Agricultural and Applied Economics Association.
    4. Maples, Joshua G. & Lusk, Jayson L. & Peel, Derrell S., 2019. "Technology and evolving supply chains in the beef and pork industries," Food Policy, Elsevier, vol. 83(C), pages 346-354.
    5. Schulz, Lee L. & Schroeder, Ted C. & Ward, Clement E., 2011. "Trade-Related Policy and Canadian-U.S. Fed Cattle Transactions Basis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), pages 1-13, August.
    6. Kim, Jong-Jin & Zheng, Xiaoyong, 2015. "Effects of Alternative Marketing Arrangements on the Spot Market Price Distribution in the U.S. Hog Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-24, May.
    7. Bocart, Fabian Y.R.P. & Hafner, Christian M., 2015. "Fair Revaluation of Wine as an Investment," Journal of Wine Economics, Cambridge University Press, vol. 10(2), pages 190-203, November.
    8. 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.
    9. Brorsen B. Wade & Fain James R. & Maples Joshua G., 2018. "Alternative Policy Responses to Increased Use of Formula Pricing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-11, January.
    10. repec:hum:wpaper:sfb649dp2013-018 is not listed on IDEAS
    11. McKendree, Melissa G. S. & Saitone, Tina L. & Schaefer, K Aleks, 2020. "Cattle Cycle Dynamics in a Modern Agricultural Market: Competition in Holstein Cattle Procurement," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304380, Agricultural and Applied Economics Association.

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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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