Hostname: page-component-7bb8b95d7b-dtkg6 Total loading time: 0 Render date: 2024-09-15T02:22:30.789Z Has data issue: false hasContentIssue false
  • English
  • Français

Causal Relationships in the Fed Cattle Market

Published online by Cambridge University Press:  28 April 2015

Thomas H. Spreen  and
J. Scott Shonkwiler
Thomas H. Spreen
Affiliation:
Food and Resource Economics Department., University of Florida
J. Scott Shonkwiler
Affiliation:
Food and Resource Economics Department., University of Florida
Get access Rights & Permissions [Opens in a new window]

Extract

The production process of transforming a 600–700 pound feeder steer into a slaughter animal typically requires four to six months. Conceptually, there should exist some relationship between the prices of feeder calves and slaughter cattle prices. In one view, since the feeder calf constitutes the costliest input in the production of the slaughter animal, the prices of fed cattle should be temporally connected to the cost of the feeder animals. This view suggests that feeder calf prices should lead slaughter prices by the length of the production process (Trierweiler and Hassler). In another view, the price of feeder calves is determined by the interaction of the supply of and derived demand for feeder cattle by feedlot operators. It is presumed that the derived demand for feeder cattle is related to feedlot operators' expectations of future fed cattle prices. If their expectations are strongly influenced by current fed cattle prices, then a relationship is suggested whereby slaughter and feeder prices vary concomitantly.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 13 , Issue 1 , July 1981 , pp. 149 - 153
Copyright
Copyright © Southern Agricultural Economics Association 1981

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arzac, Enrique R. and Wilkinson, Maurice. “A Quarterly Econometric Model of United States Livestock and Feed Grain Markets and Some of its Policy Implications.” Amer. J. Agr. Econ. 61(1979): 297–308.CrossRefGoogle Scholar
Barksdale, Hiram C.et al. “A Cross Spectral Analysis of Beef Prices.” Amer. J. Agr. Eco. 47(1975): 309–15.CrossRefGoogle Scholar
Bessler, David A. and Schrader, Lee F. “Measuring Leads and Lags Among Prices: Turkey Products.” Agr. Econ. Res. 32( 1980a): 1–7.Google Scholar
Bessler, David A. and Schrader, Lee F. “Relationship Between Two Price Quotes for Eggs.” Amer. J. Agr. Econ. 62(1980b):766–71.CrossRefGoogle Scholar
Ehrich, R. L. “Cash-Futures Price Relationships in Live Beef Cattle.” Amer. J. Agr. Econ. 51(1969):26–39.CrossRefGoogle Scholar
Feige, Edgar L. and Pearce, Douglas K. “The Casual Causal Relationship Between Money and Income: Some Caveats for Time Series Analysis.” Rev. Econ. Stat. 61(1979):521–33.CrossRefGoogle Scholar
Franzman, John R. and Walker, Rodney. “Trend Models of Feeder, Slaughter and Wholesale Beef Cattle Prices.” Amer. J. Agr. Econ. 54(1972):507–12.CrossRefGoogle Scholar
Granger, C. W. J. “Investigating Causal Relations by Econometric Models and Cross Spectral Methods.” Econometrica 37(1969):424–38.CrossRefGoogle Scholar
Gustafson, Ronald A. and Arsdale, Roy Van. Cattle Feeding in the United States. Economic Research Service, U.S. Department of Agriculture, October 1979.Google Scholar
Haugh, Larry D. “The Identification of Time Series Interrelationships with Special Reference to Dynamic Regression.” Ph.D. dissertation. University of Wisconsin-Madison, 1972.Google Scholar
Haugh, Larry D. and Box, G. E. P. “Identification of Dynamic Regression (Distributed Lag) Models Connecting Two Time Series.” J. Amer. Stat. Assoc. 72(1977): 121–30.CrossRefGoogle Scholar
Miller, Stephen E. “Univariate Residual Cross-Correlation Analysis: An Application to Beef Prices.” North Central J. Agr. Econ. July(1979): 141–46.CrossRefGoogle Scholar
Pierce, David A. “Relationships—and the Lack Thereof—Between Economic Time Series with Special Reference to Money and Interest Rates.” J. Amer. Stat. Assoc. 72(1977): 11–22.Google Scholar
Sims, Christopher A. “Money, Income and Causality.” Amer. Econ. Rev. September(1972):540–52.Google Scholar
Sims, Christopher A. “Comment.” J. Amer. Stat. Assoc. 72(1977): 23, 24.CrossRefGoogle Scholar
Trierweiler, John E. and Hassler, James. “Measuring Efficiency in the Beef-Pork Sector by Price Analysis.” Agr. Econ. Res. 23(1971): 11–18.Google Scholar