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A Hedonic Analysis of Feeder Cattle Auction Prices in Northeast Texas

Author

Listed:
  • Lopez, Jose
  • Bankole, Taiwo
  • Wahrmund, Jackie

Abstract

The U.S. has the largest fed cattle industry in the world (USDA-NASS, 2016) and makes about $10.5 billion dollars in cash receipts from beef cattle sales (Texas Department of Agriculture, 2015). Our study analyzes sales of pre-conditioned calves from 22 auctions between 2010 and 2013 in Northeast Texas, determines which intrinsic quality attributes add most value, and examines the extent to which physical attributes along with the futures market help explain variation in feeder cattle prices. Our results showed that lot size, weight, sex, breed, and feeder cattle futures prices are all statistical significant factors affecting feeder cattle cash prices. A unit gain in weight resulted in a very slight discount, heifers were discounted compared to steers, and the English breeds received premiums over crossbreds. Feeder cattle cash and futures price were positively associated with the October futures contract providing the largest bump to cash prices. Understanding of the quality attributes and the relationship between feeder cattle cash and future prices may assist local producers in formulating price risk management strategies that have implications on profitability.

Suggested Citation

  • Lopez, Jose & Bankole, Taiwo & Wahrmund, Jackie, 2017. "A Hedonic Analysis of Feeder Cattle Auction Prices in Northeast Texas," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252732, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea17:252732
    DOI: 10.22004/ag.econ.252732
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    References listed on IDEAS

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    1. Williams, Galen S. & Raper, Kellie Curry & DeVuyst, Eric A. & Peel, Derrell S. & McKinney, Doug, 2012. "Determinants of Price Differentials in Oklahoma Value-Added Feeder Cattle Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), pages 1-14, April.
    2. repec:ags:jrapmc:122309 is not listed on IDEAS
    3. Bailey, DeeVon & Peterson, Monte C., 1991. "A Comparison Of Pricing Structures At Video And Traditional Cattle Auctions," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-12, December.
    4. McBride, William D. & Mathews, Kenneth H., Jr., 2011. "The Diverse Structure and Organization of U.S. Beef Cow-Calf Farms," Economic Information Bulletin 102764, United States Department of Agriculture, Economic Research Service.
    5. Faminow, Merle D. & Gum, Russell L., 1986. "Feeder Cattle Price Differentials In Arizona Auction Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(2), pages 1-8, December.
    6. Schroeder, Ted C. & Mintert, James R. & Brazle, Frank & Grunewald, Orlen C., 1988. "Factors Affecting Feeder Cattle Price Differentials," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(1), pages 1-11, July.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Agribusiness; Demand and Price Analysis; Farm Management; Livestock Production/Industries;
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