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A Hedonic Analysis of Feeder Cattle Auction Prices in Northeast Texas

Jose Lopez, Taiwo Bankole and Jackie Wahrmund

No 252732, 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama from Southern Agricultural Economics Association

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.

Keywords: Agribusiness; Demand and Price Analysis; Farm Management; Livestock Production/Industries (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
Date: 2017-02-18
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea17:252732

DOI: 10.22004/ag.econ.252732

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