SHORT-PERIOD PRICING MODELS FOR FED CATTLE AND IMPACTS OF WHOLESALE CARCASS BEEF AND LIVE CATTLE FUTURES MARKET PRICES

Demand and Price Analysis,

Beef Packers’ Captive Supplies: An Upward Trend? A Pricing Edge?

Livestock Production/Industries,

TOWARD A PERFORMANCE EVALUATION OF THE CARCASS BEEF MARKET - WEAK FORM TEST OF THE EFFICIENT MARKETS MODEL

Industrial Organization, Livestock Production/Industries,

PRODUCTIVITY-CONCENTRATION RELATIONSHIP IN THE U.S. MEATPACKING INDUSTRY

Previous research found a positive relationship between concentration and total factor productivity in food manufacturing. On industry (i.e., meatpacking plants [SIC 2011]) was selected for independent analysis due to a relatively sharp increase in concentration in recent years. The methodology chosen was similar to previous studies. Total factor productivity increased 2.4 percent per year, and labor productivity increased 3.3 percent per year for meatpacking plants over the 1958-82 period. Concentration in meatpacking did not positively or negatively affect total factor productivity or labor productivity over the 25-year study period.Productivity Analysis,

Preferential Cattle and Hog Pricing by Packers: Evidence from Mandatory Price Reports

Preferential pricing was one of several concerns leading to mandatory price reporting. Seven years of “new” data from mandatory reports are examined to determine if evidence exists of preferential pricing by packers for fed cattle and slaughter hogs. Weekly data show some alternative marketing methods track closer to cash market prices than others. Some differences can be explained, while others are not as clear. Evidence was found that cash prices lead prices for alternative marketing methods on rising markets but trail them on declining markets.Alternative marketing arrangements, Cattle, Hogs, Marketing, Meatpacking procurement, Price discovery, Pricing, Livestock Production/Industries, Marketing,

RELATIONSHIP BETWEEN FED CATTLE MARKET SHARES AND PRICES PAID BY BEEFPACKERS IN LOCALIZED MARKETS

Industrial organization theory hypothesizes that larger beefpackers can depress prices paid for cattle. Prices paid between at least two beefpackers in some localized markets studies were found to be significantly different for the one-month study period. However, larger beefpackers in each market paid neither lower or higher prices than the smallest buyer, with just one exception. No significant relationship was found between market shares of buyers and average prices paid for cattle. Thus, the hypothesis that larger beefpackers pay significantly lower prices was rejected.Livestock Production/Industries,

Supply Effects on Price Discovery and Pricing Choice for Fed Cattle

Price discovery research related to fed cattle has involved data covering a relatively small portion of the longer cattle cycle. Thus, research has not explicitly addressed the impacts alternative supply conditions have on price discovery. Additionally, little research has addressed the pricing choices for fed cattle marketing or procurement. In research reported here using data from an experimental market, the Fed Cattle Market Simulator, models were estimated that encompassed live weight, dressed weight, and grid pricing under alternative supply scenarios, specifically a larger supply and smaller supply period. Variables explaining fed cattle price variation differed somewhat between the two supply periods. For the two periods combined, results were nearly as theoretically expected. One consistent finding was that higher quality fed cattle marketed with a grid brought higher prices in both supply periods. Similarly, some differences were noted in the pricing choice model between the two periods and the combined periods. Another consistent finding was that having lower quality cattle to market increased the probability of marketing them on a live weight basis. Higher quality cattle were more apt to be marketed with a grid.Livestock Production/Industries,

Factors Influencing the Extent of Grid Pricing of Fed Cattle

Motives for grid pricing of fed cattle have been identified in previous research. Also, estimates of grid pricing exist from feedlot surveys and data generated via mandatory price reports since 2001. However, no research has attempted to estimate factors influencing the extent of grid pricing by cattle feeders. Cattle feedlot respondents to a survey primarily in Nebraska, Colorado, Kansas, and Texas reported a wide range of grid pricing use in 2003. Two groups of feedlot respondents were created; those using grid pricing for half or less of their fed cattle marketings in 2003 and those using grid pricing for more than half of their marketings. Ordinary least squares and ordered logit models were estimated to determine factors affecting grid pricing use for the two comparison groups. For many potential factors influencing grid pricing, no significant differences were found between groups. The two most robust factors were the percent of fed cattle sold to the largest buyer and the percent of fed cattle marketed with some type of agreement, contract, or through an alliance or cooperative. Other significant factors related to market conditions and expected carcass performance of the cattle. However, results were neither consistent nor strong enough to explain the sharp drop in formula pricing fed cattle during the third year following implementation of mandatory price reporting.Livestock Production/Industries, Marketing,

COMPARATIVE ANALYSIS OF SLAUGHTER LAMB PRICES

Data on weekly summaries of slaughter lamb sales in 1996 were analyzed to determine price differences for factors affecting lamb prices. Models were compared with a 1991 study and across regions. Demand and supply variables were found important as well as marketing methods, sale lot sizes, seasonal and regional variables.Livestock Production/Industries,

AN EMPIRICAL STUDY OF COMPETITION IN THE PRICE DISCOVERY PROCESS FOR SLAUGHTER LAMBS

Buyer competition in the price discovery process for slaughter lambs at an Oklahoma teleauction was studied. Number of buyers positively influenced both absolute and relative sale prices but did not significantly affect buyer gross margins. Buyer market shares also affected prices paid and buyer gross margins. Thus, competition among buyers was found to be important in the price discovery process.Demand and Price Analysis, Livestock Production/Industries,