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The Dynamics of Feeder Cattle Market Responses to Corn Price Change

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

Abstract

A feeder-calf price model is estimated which incorporates elements of break-even budget analysis, including estimates of placement weights, slaughter weights, ration cost, and feed-conversion rates. From this model, a corn price multiplier is calculated which quantifies the corn/feeder-calf price relationship. Because the multiplier includes information on cattle weight, feed conversion, and ration cost, it also provides insight into how feeding programs are altered in response to corn price changes. Changes in feeding programs which occur in response to corn price changes are illustrated with dynamic simulation based on weight, ration cost, and price models presented here.

Suggested Citation

  • Anderson, John D. & Trapp, James N., 2000. "The Dynamics of Feeder Cattle Market Responses to Corn Price Change," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(3), pages 493-505, December.
    • Handle: RePEc:cup:jagaec:v:32:y:2000:i:03:p:493-505_02
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    1. Langemeier, Michael R. & Schroeder, Ted C. & Mintert, James R., 1992. "Determinants Of Cattle Finishing Profitability," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(2), pages 1-7, December.
    2. Steven T. Buccola, 1980. "An Approach to the Analysis of Feeder Cattle Price Differentials," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 574-580.
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    1. Schmit, Todd M. & Verteramo, Leslie & Tomek, William G., 2007. "Biofuel Demands: Their Implications for Feed Prices," Working Papers 179943, Cornell University, Department of Applied Economics and Management.
    2. Schmit, Todd M. & Verteramo, Leslie & Tomek, William G., 2009. "Implications of Growing Biofuel Demands on Northeast Livestock Feed Costs," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 200-212, October.
    3. Blank, Steven C. & Saitone, Tina & Sexton, Richard & Kalotia, Kabir & Forero, Larry & Nader, Glenn, 2011. "Location and distance effects on western calf and yearling prices," 2011 Annual Meeting, June 29-July 1, 2011, Banff, Alberta,Canada 291744, Western Agricultural Economics Association.
    4. Hardin, Dan & Saghaian, Sayed, 2014. "Factors that Affect Seasonality in Kentucky Feeder Calf Prices and How Calving Dates Affect Cow-Calf Enterprise Profitability," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162495, Southern Agricultural Economics Association.
    5. Augusto Hauber Gameiro, 2022. "Factors Defining Prices of Finished Cattle in Mato Grosso Contrasted Within Brazil’s Pricing Structure," Journal of Agricultural Studies, Macrothink Institute, vol. 10(4), pages 218-235, December.
    6. Huan Zhao & Xiaodong Du & David Hennessy, 2011. "Pass-through in United States beef cattle prices: a test of Ricardian rent theory," Empirical Economics, Springer, vol. 40(2), pages 497-508, April.
    7. Brake, William & Anderson, John D. & Coffey, Brian K., 2006. "Geographic and Seasonal Differences in the Feeder Cattle Hedging Risk," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35325, Southern Agricultural Economics Association.
    8. Burdine, Kenneth H. & Halich, Greg, 2014. "Payout Analysis of Livestock Risk Protection Insurance for Feeder Cattle," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2014, pages 1-14.
    9. Tejeda, Hernan A. & Goodwin, Barry K., 2009. "Price Volatility, Nonlinearity, and Asymmetric Adjustments in Corn, Soybean, and Cattle Markets: Implications of Ethanol-Driven (Market) Shocks," 2009 Conference, April 20-21, 2009, St. Louis, Missouri 53039, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    10. Maples, Joshua G. & Harri, Ardian & Riley, John Michael & Tack, Jesse B., 2013. "Marketing Margins and Input Price Uncertainty," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150604, Agricultural and Applied Economics Association.
    11. Koirala, Krishna H. & Mishra, Ashok K. & D'Antoni, Jeremy M. & Mehlhorn, Joey E., 2015. "Energy prices and agricultural commodity prices: Testing correlation using copulas method," Energy, Elsevier, vol. 81(C), pages 430-436.
    12. Belasco, Eric J., 2008. "The Role of Price Risk Management in Mitigating Fed Cattle Profit Exposure," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), pages 1-17.
    13. Swanser, Kole, 2013. "Dynamics of Feeder Cattle Basis and Price Slides," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150249, Agricultural and Applied Economics Association.
    14. Burdine, Kenneth H. & Maynard, Leigh J. & Halich, Greg, "undated". "Factors Affecting Feeder Cattle Prices in the Southeast," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142976, Southern Agricultural Economics Association.
    15. Janzen, Matthew & Coatney, Kalyn T. & Rivera, Daniel & Harri, Ardian & Riley, John Michael & Busby, Darrell & Groves, Matt, "undated". "Fed Cattle Marketing: A Field Experiment," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252844, Southern Agricultural Economics Association.
    16. Blank, Steven C. & Saitone, Tina L. & Sexton, Richard J., 2016. "Calf and Yearling Prices in the Western United States: Spatial, Quality, and Temporal Factors in Satellite Video Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-23.
    17. Mathews, Kenneth H., Jr. & Arnade, Carlos Anthony & Jones, Keithly G., 2008. "Derived Demand for Cattle Feeding Inputs," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 26(1), pages 1-20.

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