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Corn Price Effects On Cost Of Gain For Feedlot Cattle: Implications For Breakeven Budgeting

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  • Anderson, John D.
  • Trapp, James N.

Abstract

Elasticities calculated from an econometric model of cost of gain (COG) for cattle in feedlots indicate that COG is considerably less responsive to corn price changes than breakeven budgets assume. This difference in elasticities can lead to substantial errors in COG estimates obtained from budgeting. Size of error will depend upon the initial corn price and the magnitude of corn price change. Given average corn price levels and month-to-month changes, the error in budget-based net revenue projections will be about $3/head.

Suggested Citation

  • Anderson, John D. & Trapp, James N., 2000. "Corn Price Effects On Cost Of Gain For Feedlot Cattle: Implications For Breakeven Budgeting," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-11, December.
    • Handle: RePEc:ags:jlaare:30896
    DOI: 10.22004/ag.econ.30896
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    2. Marsh, John M., 1999. "Economic Factors Determining Changes In Dressed Weights Of Live Cattle And Hogs," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-14, December.
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    Cited by:

    1. Brester, Gary W. & Marsh, John M., 2001. "The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-18, December.
    2. Tang, Minfeng & Lewis, Karen E. & Griffith, Andrew P. & Boyer, Christopher N., 2016. "Identifying Factors that Impact Returns to Retained Ownership of Cattle," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229766, Southern Agricultural Economics Association.

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    Keywords

    Livestock Production/Industries;

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