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Transmission of prices, profits, and more generally, economic well‐being across vertically connected sectors of agriculture have a long history of interest—arguably of most current interest in meat and livestock markets. Disruptions in live animal harvesting, especially from COVID‐19, have corresponded with substantial market adjustment and hence elevated interest in inner‐industry relationships, including from policymakers. This paper's main contribution is assessing how price changes in the U.S. feedlot industry manifest in feeder cattle markets. We use Ricardian rent theory as a framework to quantify price transmission by testing how price fluctuations actually pass through the supply chain versus theoretical expectations. We posit that the capacity utilization of feedlots changes because of market shocks, impacting price relationships. In the empirical model, when feedlot capacity utilization rates are below the 65% critical point, we find that both fed to feeder cattle and corn to feeder cattle pass‐through rates are higher than hypothesized. When feedlot capacity utilization rates are high (>65%), estimated pass‐through rates are lower and not statistically different from Ricardian rent theory. Understanding how prices pass through in the beef industry can help inform policy discussions about beef market competitiveness and promote efficient resource allocation. [ABSTRACT FROM AUTHOR]

United States cattle producers have various government‐sponsored programs to protect against weather and disease related risks, but livestock risk protection (LRP) insurance is the only program that protects against price risk. However, adoption of LRP insurance is low even though cattle price declines are the primary cause of economic loss, and LRP premium subsidies have recently been increased. Therefore, the objective of this study is to explore how informational nudges about receiving an indemnity payment, LRP contract characteristics, and individual risk preferences affect the use of LRP. Producer survey results were estimated using a Cragg model to determine the factors affecting producers' likelihood of purchasing LRP and the number of head they would insure. Producers were more likely to purchase 100% LRP coverage and would also insure more head at 100% coverage when compared to lower coverage levels. We found providing information on the probability of receiving an indemnity did not impact LRP purchasing decisions. However, counter to expectations, producers were more likely to buy LRP when the randomly provided cattle prices in the survey were successively increasing each month, and if participants considered themselves more willing to take risks in their cattle operation. Results provide insights into behavioral factors affecting LRP participation which could help inform future insurance policies. [ABSTRACT FROM AUTHOR]

Most U.S. beef packers with multiple plants now openly employ multi‐plant coordination. Using a Salop Circular City framework that includes negotiated and formula pricing, we demonstrate that multi‐plant coordination leads to wider spreads between downstream beef prices and upstream fed cattle prices if multi‐plant coordination markdowns outweigh multi‐plant coordination efficiencies. Taken together with market concentration, geography and transportation costs, and cattle cycles and related beef packer capacity utilization, multi‐plant coordination helps explain persistently wide farm‐to‐wholesale beef price spreads. We find that, as cattle inventories decline, a multi‐plant coordinator will permanently shut down a plant before the same plant run as a separate profit center will shut down, which is consistent with packer behavior in recent years. We also demonstrate that adding a strategically‐located packing plant, owned by an entrant firm, can narrow price spreads. This framework is important for ongoing policy discussions regarding the structure, conduct, and performance of the beef packing industry. [ABSTRACT FROM AUTHOR]

Recent wide spreads between boxed beef cutout values and fed cattle prices have reignited beef cattle producers' long‐held concerns about price discovery. The recent concerns have led to policy proposals meant to increase negotiated trade volumes in the cash market. We determine how volume, day of the week, sex, grade, weight range, and other factors impact price ranges in the negotiated cash market. We find many factors, in addition to sales volume, can impact price ranges. The analysis provides insight into current policy proposals, and we discuss the need for more detailed data for precise answers to current policy questions. [ABSTRACT FROM AUTHOR]

Livestock Mandatory Price reporting, enacted to increase market transparency, has been in place for more than 20 years. However, immense structural change in cattle and beef markets has challenged market information over that time. Large variation present in cattle transaction prices, especially those in the Formula purchases category, on any given day has made traditionally United States Department of Agriculture (USDA)‐reported weighted‐average prices less meaningful. Using nearly 6 years of The Livestock Mandatory Reporting Act of 1999 transactions data from USDA Agricultural Marketing Service (USDA AMS), we demonstrate use of hedonic modeling to facilitate price reporting. While the models show promise to provide useful information, they reveal substantial weaknesses associated with current transaction information collected by USDA from packers. We offer suggestions for improved data collection which would make hedonic modeling of transactions prices a more valuable tool to increase usefulness of reported market prices. [ABSTRACT FROM AUTHOR]

Livestock markets influence income generation for producers, but also accessibility and affordability of highly nutritious animal‐sourced foods for consumers. Despite their importance, the functioning of livestock markets in lower‐income countries is poorly understood and rarely studied compared to more developed countries. This study analyzes wholesale cattle markets in Ethiopia using a uniquely rich large‐scale dataset covering both prices and cattle characteristics in 39 markets (in both highland and lowland areas) over a 10‐year period, and hedonic regression models structured to understand both cattle price formation and seasonal and secular price dynamics. We show that cattle prices are influenced by a wide range of factors, including proxies for meat quality, religious fasting practices, climate‐based seasonality but also climate shocks and availability of grazing land, competition from animal traction services, and rising consumer incomes. However, the implied effects of these factors are often significantly different in highland mixed crop‐livestock areas compared to agro‐pastoralist lowland areas, emphasizing the dualistic nature of cattle markets in Ethiopia. The analyses help inform the systemic challenges that Ethiopia will need to overcome to meet rising demand for beef products in the face of sustained income and population growth, as well as the adverse effects of climate change. [ABSTRACT FROM AUTHOR]

Concerns surrounding horizontal concentration, vertical coordination, regional procurement areas, and resultant thinly traded input markets have beset the U.S. beef industry for decades. In late 2016, Tyson Foods, Inc. announced to its suppliers that it would no longer purchase Holstein cattle at its Joslin, IL harvest facility. This alteration to Tyson's procurement policy provides a unique opportunity to estimate the degree and extent to which a firm‐level decision impacted the beef supply chain. Results indicate that Tyson's decision resulted in a 5.5% (3.5%) reduction in live (dressed) Holstein prices. This impact was immediate, and the updated equilibrium price relationship has persisted. Price impacts were more significant upstream; Holstein feeder cattle prices were reduced by 22% initially and struggled to find a new equilibrium level for more than two years, ultimately stabilizing 4.8% below pre‐announcement levels. We extend the price adjustment analysis to estimate impacts on U.S. Holstein feeder operations' revenues and gross margins, quantifying losses totaling $610 million annually. [ABSTRACT FROM AUTHOR]

In a sequential English auction, where multiple homogenous objects are offered, it is often found that the price tends to decrease over the course of the auction, which is referred to as the "declining price anomaly". This article studies the price trend in a sequential online live cattle auction. Motivated by the fact that in an English first‐price auction, the winning price is the maximum among all the bids offered, we examined the existence of the declining price anomaly by introducing the Generalized Extreme Value theory framework, and nesting it within a hedonic regression, where the price of cattle relates to the market values for cattle attributes. Empirical results indicate that the unit price difference between the first and the last lot sold ranges from $7.82 to $2.31, depending on the average animal weight in that lot. On average, the unit price of a stocker cattle lot sold in the last position of a typical sale is $5/cwt (or 3%) less than if it was sold in the first place, regardless of the scale of the sale and keeping all other factors constant. Based on the theoretical framework developed by Brendstrup and Paarsch (2006), we find that the buyer's maximum valuation on the subsequent object actually declines as he wins more objects, which provides a plausible explanation for the declining prices anomaly in sequential auctions. [ABSTRACT FROM AUTHOR]

Prices of agricultural products often vary in relatively stable patterns around their long‐run trends. These variations translate into fluctuations of selling prices as well as farm revenues. We provide an overview of the current literature on agricultural price cycles. Using a transparent and reproducible model selection process and the Kalman filter, we select optimal models and estimate the cyclic patterns of hog and cattle prices for Brazil, Chile and Uruguay. Durations of those cycles are found to be about three years and seven years, respectively. These durations are in line with the literature and the biological characteristics of livestock production. Our results can inform producers forecasts on price developments in the short and medium run. They are useful for guiding policy makers on the timing of policy interventions for influencing the duration or the amplitudes of cycles. [ABSTRACT FROM AUTHOR]

ABSTRACT This study compares price transmission behaviors between pre- and post-EPA (Energy Policy Act) periods to investigate the impact of increased production of corn ethanol on price transmission behaviors between five regional fed cattle markets in the United States: Colorado, Iowa-Minnesota, Kansas, Nebraska, and Texas-Oklahoma. Econometric models used in this study consider potential nonlinearity and asymmetry in price transmissions using threshold autoregression and threshold error correction methods, and generalized impulse response functions. Overall, the surge of corn ethanol production after the EPA enactment appears to lead lower integration and slower price adjustment between markets, particularly between noncorn-belt and corn-belt markets. Our analysis also finds strong evidence of the existence of threshold effects and limited evidence of asymmetric price responses in the short and long run for both pre- and post-EPA periods. [EconLit citations: C32, Q13]. [ABSTRACT FROM AUTHOR]

A seven-year comparative study of grid pricing versus average pricing of slaughter cattle was conducted to evaluate carcass quality market signals. The primary objectives of the study are to determine: (1) if market signals sent through the grid pricing system indicate an improvement in the grid incentive mechanism over time, (2) how changes in the grid premium and discount structure associated with carcass quality affect the market risk premium, and (3) if changes in price risk (variance) affect producer marketing decisions. An Exponential-Autoregressive-Conditional-Heteroskedasticity-in-Mean (EARCH-in-Mean) modeling procedure was adopted. Empirical results suggest that the grid premium and discount structure is slowly adjusting carcass quality market signals to encourage marketing on a grid and discourage marketing by the pen. The inclusion of the conditional variance in the empirical model indicates that variance associated with the carcass quality risk premium adds financial risk associated with the adoption of grid pricing. [ABSTRACT FROM AUTHOR]

We study beef packing margins before and after mandatory price reporting (MPR) was implemented in 2001 using a model that identifies and tests for switching between cooperative and non-cooperative regime pricing. Our results show that after MPR took effect, the duration of non-cooperative regimes was considerably shorter, while cooperative regimes were longer. Oligopsonistic rent, as measured by average economic profit, rose from $0.88/head in the 1990s to $2.59/head after 2001. While MPR is not likely the sole cause for such an increase, there was clearly more market power being exercised in fed cattle markets in the years after the program was implemented than before. [ABSTRACT FROM PUBLISHER]

This study examines the bull trait preferences of cattle buyers and estimates the relative willingness to pay for the preferred attributes. Data were generated using choice experiment method in five markets in central Ethiopia. Standard and Heterogeneity in Mean (H-M) Random Parameters Logit (RPL) models were used to analyze buyers' preferences for traits, while kernel density estimators were employed to examine the distribution of the willingness to pay for the individual traits. The results show that cattle buyers of central Ethiopia assign high values for good traction potential, big body size, disease resistance, calf vigor, and for places of origin when choosing bulls in the market. The preferences cattle buyers have for these attributes do vary essentially due to differences in occupation, education and age. The main implication of the findings is the necessity of identification and reckoning of trait preferences while designing crossbreeding efforts meant to sustain development of cattle production. Comprehensive and informed approach in this regard will also contribute in reducing the erosion of the genetic diversity of the indigenous animal genetic resources. [ABSTRACT FROM AUTHOR]

The relationship between the dynamic cattle cycle and the potential for market power in cattle purchases has rarely been studied. This paper provides a conceptual framework showing how the cattle cycle and buyer market power are related. Not only does a larger cattle stock lead to a lower fed cattle price, but the cattle stock's negative effect on price is magnified by the degree of buyer market power in cattle procurement. Empirical findings support the posited theoretical relationships and help explain why previous researchers reached different conclusions regarding the extent of market power in the industry. [ABSTRACT FROM AUTHOR]

In May 2003, a beef cow in the Province of Alberta tested positive for bovine spongiform encephalopathy (BSE or mad cow disease). In December of 2003, a dairy cow in the state of Washington also tested positive for BSE. These discoveries disrupted cattle and beef trade in North America and major export markets. We examine the effects of these two North American BSE events on U.S. fed and feeder cattle prices. The results indicate that the demand for U.S. beef was affected to a much greater degree by the reactions of foreign governments to the BSE announcements than by the reactions of U.S. households. [ABSTRACT FROM AUTHOR]

Mandatory livestock price reporting was designed to increase available price information with the intent of facilitating price discovery. Has the program been effective? This study determines how cattle feeders, a primary target of the program, feel about mandatory price reporting (MPR) effectiveness. Results from a survey of cattle feeders reveal a diversity of opinion. Producers tend to be neutral to slightly negative regarding the value of MPR. Some of the dissatisfaction appears to have been associated with unrealistic expectations. Most feedlot characteristics have little systematic relationship to the manager's perceptions regarding usefulness of MPR. [ABSTRACT FROM AUTHOR]

Time series methods and directed acyclic graphs are used to uncover the centre of price discovery in 10 weight/gender classes of feeder and fed cattle from cash markets in Texas, U.S.A. Heavy feeder heifers, animals sitting on a margin of feeding for meat or breeding for new stocks, are weakly exogenous in an error correction representation of these prices. Further, contemporaneous price innovations from this class of animals cause price innovations in feeder steers and lighter weight feeder heifers. Innovation accounting shows the prominent role that heavy heifers play in cattle price discovery. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Presents a study which reported the impacts on transaction prices from imposing an exclusive marketing agreement on the simulated fed cattle market. Experimental design and data; Transaction price models used; Empirical results; Conclusions.

Examines the ability of the lagged spread and lagged basis to explain movements in nearby live cattle basis. Forecast of live cattle basis during the month preceding contract delivery; Lagged spread's independence from a specific geographic location; Forecast of nearby basis using readily available futures and cash price series.

Investigates the factors influencing the prices of feeder cattle. Impact of feeder cattle futures prices on cash prices; Center for price discovery for feeder cattle; Dependence of buyers and sellers on futures market.

Examines the efficiency of forward pricing on the live cattle futures market. Possibility of requiring risk premiums to balance the market; Significance of past price data in the formation of live cattle future prices; Requirement in profitable and effective hedging program of cattle producers.

Deals with a study which explored the hypothesis that observed day-to-day price variation in cattle and hogs is greater in direct markets than in terminal markets. Methods; Results; Interpretation.

Four hypotheses about the price-forecasting performance of live cattle and hog futures are tested using disaggregated data. Live cattle futures are found to have inadequate forecasting performance for each hypothesis and do not provide better forecasts than lagged cash prices. Live hog futures perform well for three hypotheses, but not when economic conditions are unstable. Hog futures provide better forecasts than lagged cash prices. The analysis does not support the contention that these futures markets are agencies for rational price formation. [ABSTRACT FROM AUTHOR]

Introduces an approach for analyzing feeder cattle price differentials. Background on price differentials; Simulation of price differentials. [ABSTRACT FROM AUTHOR]

Discusses a study which examined the impact of beef and beef by-product exports on live cattle prices. Review of related studies; Description of the model; Analysis of results; Implication of the study.

The manner in which producers form price expectations is often a destabilizing influence on observed prices. Recent price trends are extrapolated, leading to delayed or accelerated marketings which reinforce the existing price trend. An analysis of monthly steer and heifer slaughter yields this conclusion. The theoretical framework links capital theory with the hypothesis concerning extrapolation of price trends. Apparent conflicts in previous studies of the short-term response of slaughter to prices are clarified and partially resolved by the theoretical and empirical results. [ABSTRACT FROM AUTHOR]

Cash cattle prices are found to be more accurate indicators of subsequent cash cattle price conditions than are the futures prices for distant contracts. This apparent relative inability of futures prices for live beef cattle to reflect later spot prices is becoming more pronounced over time. [ABSTRACT FROM AUTHOR]

Investigates the differential effect of timing and product characteristic based measures of buyer concentration on the selling price of auctioned feeder cattle. Indication that the fundamental dynamic price generation mechanism in feeder cattle auction is affected by measures of buyer concentration.

Examines whether certain management or marketing practices affect the price of feeder cattle at auction using a static premium and discount analysis. Data on animal and market characteristics; Ways by which marketing price of feeder cattle can be enhanced; Factors that affect cattle prices.

Opinion. Focuses on the impact of price captive-supplies on the beef industry, while examining the interpretations offered in empirical literature. Extension of Gardner's one-product, two-input model to consider a partially integrated oligopsonistic industry; Additional structural detail needed for an econometric model to detect what type of conduct the relationship reflects.

Presents multivariate time-series forecasts of weekly live cattle prices in six different geographic markets. Market timing and forecast magnitude; Evaluation of arbitrage portfolios.

Examines effects of fluctuations in cattle supply on deviations of fed cattle prices from cattle's marginal value product. Measurement of price-taking behavior within the beef-packing industry; Definitions of equations; Applications using US commercial beef-production quarterly data from 1972 to 1986; Summary and implications.

Examines fed cattle price difference among buyers and buyer groups inn the Southern United States following the mergers of 1987. Specific focus on transaction price differences.

Distributed lags were used to estimate the beef price effects of the 1986-87 Dairy Termination Program. The model estimated the direct effects of dairy slaughter and indirect effects of fed and nonfed supply response on the feeder, slaughter, and carcass markets. The results showed that, without offsetting U.S. Department of Agriculture red meat purchases, price reductions would have ranged from about $1.60 to $4.00 per hundredweight but were reduced by one-half with the red meat purchases. If the Department of Agriculture had scheduled dairy slaughter more evenly over eighteen months, price reductions would have been 34% less. [ABSTRACT FROM AUTHOR]

The pricing efficiency of the live cattle futures market is evaluated using out-of-sample forecasts from an econometric model, an ARIMA model, and composite forecasting procedures In terms of the mean-squared error criterion, a necessary condition for market efficiency, at least one of the models, and frequently more, forecasted more accurately than did the futures market However, market simulation results based on the most accurate forecasts generated large risk-return ratios These results do not show strong evidence of inefficiency and call into question the use of only mean-squared errors to examine a market's pricing efficiency. [ABSTRACT FROM AUTHOR]

Responds to commentaries on the concept of realized farm income. Relation between cattle prices and inventories; Elements of a realized net income; Issues about purchasing power.

The article offers the author's insights on the effort of Department for Environment, Food and Rural Affair (DEFRA) in Great Britain to implement the risk-based trading scheme in the market. The author states that the scheme aims to inform buyers regarding the bovine tuberculosis (TB) and the risk TB infection. He discusses the importance of obtaining the Officially TB-Free (OTF) status. He argues on the need for veterinary surgeons to collaborate with the buyers regarding their decisions.