Agricultural Economics Department
Date of this Version
2003
Abstract
Numerous articles in the agricultural economics literature investigate the empirical relationship between the spot market price of fed cattle and the volume of packers’ precommitted, or “captive,” supplies of cattle. In this article, we use an extensive data set on the cattle procurement activities of four large packing plants in the Texas Panhandle from early 1995 through mid-1996 to examine this relationship at the plant-level. We find evidence to support the hypothesis that plants that anticipate near-term future deliveries of captive supply cattle that are high relative to their regional-market rivals’ degrees of reliance on captive supplies tend to pay spot market prices that are below average. The effect, while statistically significant, is relatively small in magnitude, however.
Comments
Published in Agribusiness 19:4 (2003), pp. 489–504; doi 10.1002/agr.10070 Copyright © 2003 Wiley Periodicals, Inc. Used by permission.