Volume 16, Issue 2
Peel, Derrel S.; Riley, John Michael
The cattle industry consists of a complex set of production and marketing activities across unrelated market participants widely dispersed in time, place and form (Peel, 2015). The industry relies on market prices and signals to coordinate these diverse activities. Feeder cattle markets collectively represent the principal point of market contact between all production sectors of the industry (Peel, 2011). Feeder cattle markets provide the market venue for the sale of calves from the cow-calf sector; the source of feeder cattle purchased by feedlots for finishing; and, in between, stocker and back grounding activities that arbitrage feeder cattle across weights, space and time to provide an efficient set of market prices (Peel, 2011).
Tompson, Nathanael M.
Commercial genetic testing services targeted at the beef industry have become quite common in recent years, with many in the beef industry promoting the benefits they provide. However, economic considerations of financial feasibility are limited. What little work that has been done has focused on the use of genetic information to improve feedlot management decisions for commercial cattle. Generally, this work was unable to substantiate positive economic returns. Despite the lack of current economic rationale, the potential for this technology remains strong. In this article, we provide a brief overview of the work that has been done with respect to economics of genetic testing in the beef industry as well as a discussion of future opportunities and challenges. Mainly, this revolves around what is needed to achieve a scenario of cost-effective genetic testing Ð either increasing the value of genetic information or decreasing the cost of the test. While animal scientists are working to provide more accurate tests that have the potential to increase the value of genetic information, producers seeking to use this technology have no control over the rate at which these new variations are released. Therefore, at present, increasing the value of genetic information will require additional vertical coordination or cooperation among different sectors of the beef industry as well as more efficient price signaling. On the other hand, reducing the cost of the test could also help in achieving cost-effective implementation of genetic testing. Two specific scenarios are discussed: (i) offering reduced profiles of genetic information relevant to a specific decision at a reduced cost and (ii) randomly sampling a subset of a group of cattle for genetic testing to measure the genetic potential of the group.
Wilder, Brett; Tejeda, Hernan; Johnson, Aaron
Basis variability in live cattle markets has substantially grown over the past few years. Since the beginning of the new cattle cycle (2014), volatility1 experienced by the live2 cattle futures market has grown by more than 150% in comparison to previous years. This new scenario has considerable implications for participants in the futures markets, both hedgers and speculators. We review the changing live cattle market conditions from the implementation of the Livestock Marketing Reporting (LMR) up to date. Additionally, we document and interpret changes to live cattle basis while providing examples of how basis volatility impacts profitability.
Selasco, Eric J.; Hungerford, Ashley E.
Drought represents one of the main risk factors in ranching in the Western United States. To assist in mitigating against the impacts of drought, the pasture, rangeland, and forage (PRF) insurance product was developed by the Risk Management Agency (RMA) and first offered in 2007 as a pilot product. Recent changes to PRF, including (1) increased availability, (2) changing the index from vegetative to rainfall in several states, and (3) updating the prices, have led to an increase in both acreage and participation since 2015. The number of insured acres has increased by 79.7 percent from 54.7 million acres in 2015 to 98.3 million acres1 in 2018. The number of policies sold has also increased from 24,693 in 2015 to 32,761 in 2018, amounting to a 32.7 percent increase. Results demonstrate support for PRF loss ratios being close to RMA objectives, while policy selections have resulted in insured months not always aligning with months where rainfall is critical for forage production.
Tejeda, Hernan; Glaze, Benton; Jensen, K. Scott
Bull expected progeny differences (EPD) and actual performance data were examined along with their auction prices in order to identify the significant impact of different traits on the resulting bullÕs price, in specific regions of the Pacific Northwest. The objective was to determine the characteristics most valued by bull purchasers for this region of the country, which receives less precipitation and has higher elevation when compared to the Plains or the Midwest, where most similar studies have been focused in the past. Auction catalog information of bull sales and final sale price, from two different regions in Idaho, are used to estimate hedonic models, with price as a function of their simple performance measurements (SPMs), EPDs and value indexes. For the north central region of Idaho, the catalog provided SPMs Ð birth weight (BW), 205-day weight (205 WT) and 365-day weight (365 WT) Ð had a significant positive effect on the price paid by cow/calf producer. In addition, EPDs for milk (MILK), docility (DOC) and birth weight (BEPD) were significant, though BEPD had a negative effect on the bullÕs price. For the southwest region of Idaho, the only SPM provided in all the catalogs Ð birth weight (BW) Ð was found to have a significant negative effect on price. The yearling age EPD (YEPD) was found to have a significant positive effect on price. In this southern region of Idaho, both the index of weaned calf value ($W) and of cow energy value ($EN) were found to have a significant positive effect on prices. Some results corroborate previous study findings, though others appear to be related to the geographic region of the U.S. More data are being sought to provide further insights and measure their robustness.