Procurement Price Relationships for Fed Cattle and Hogs: Importance of the Cash Market in Price Discovery

ABSTRACT Reduced reliance on cash markets for fed cattle and hogs raises questions about the role of cash prices in price discovery. Weekly data from mandatory price reports were used to determine whether cash market prices were cointegrated with and exhibited Granger causality with other procuremen...

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Published in:Agribusiness (New York, N.Y.) N.Y.), 2012-03, Vol.28 (2), p.135-147
Main Authors: Lee, Yoonsuk, Ward, Clement E., Brorsen, B. Wade
Format: Article
Language:English
Subjects:
Agribusiness
Bidirectional
Cash
Cattle
Causality
Hogs
Livestock industry
Market prices
Markets
Procurement
Q13
Q18
Studies
Swine
Viability
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cited_by cdi_FETCH-LOGICAL-c4998-6b38a72a7d19363869b59b36823c65c2898b1e742002e865ad0bf2e9cdb34adb3
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description ABSTRACT Reduced reliance on cash markets for fed cattle and hogs raises questions about the role of cash prices in price discovery. Weekly data from mandatory price reports were used to determine whether cash market prices were cointegrated with and exhibited Granger causality with other procurement prices. Cash prices were cointegrated with all but one cattle and one hog procurement price series over the 2001–2010 period. Cash market prices Granger cause all other procurement prices and bidirectional causality was found in some but not all cases. Results for three 3‐year subperiods showed some decline in cointegration and causality for hogs. The cash market remains important for price discovery but continuing market thinness, especially in hogs, raises questions regarding viability of the cash market in the future.
doi_str_mv 10.1002/agr.21288
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source Business Source Ultimate; Wiley-Blackwell Read & Publish Collection
subjects Agribusiness
Bidirectional
Cash
Cattle
Causality
Hogs
Livestock industry
Market prices
Markets
Procurement
Q13
Q18
Studies
Swine
Viability
title Procurement Price Relationships for Fed Cattle and Hogs: Importance of the Cash Market in Price Discovery
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