Document Type

Article

Publication Date

1-15-2004

Keywords

livestock, cattle industry, slaughter cattle, pricing

Abstract

One consequence of federal mandatory livestock price reporting regulations for the cattle industry was the discontinuation of eight regional voluntary price reports for slaughter cattle. The economic implication for market transparency in those affected regional markets is investigated. Agricultural Marketing News Services data were collected from discontinued price reports for a five-year period, along with aggregated regional price reports that were not eliminated under the new price reporting regime. Both sets of price reports were analyzed to determine if any of the price series, which continued to be published as mandatory reports, could be used by producers as a replacement for the discontinued reports in their respective regions. The empirical findings show that western regional markets currently do not have adequate, published, alternatives to replace the discontinued western regional price reports for live cattle. Midwestern regional markets, however, do have alternative price reports currently being published that can be used as alternative sources of market information. We conclude that market transparency was degraded in western regional markets relative to Midwest regional markets by the decision to eliminate the eight regional live cattle price reports. This implies that price discovery in regional markets may also be negatively impacted. Empirical results suggest that the lack of adequate alternative sources of market information in western regional markets may result in further deterioration in market transparency and price discovery in the future.

Publisher

Department of Economics, South Dakota State University

Series Number

2003-4

Number of Pages

22

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