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Abstract

ADDING WEIGHT TO A THINNING LIVE CATTLE MARKET Abstract Many segments of the beef cattle industry have raised concerns that the live cattle negotiated market has become so thin that it no longer reflects underlying beef supply and demand fundamentals. The percentage of live cattle procured through negotiations has declined to about 15% while the percentage procured through formulas has increased to almost 70%. Proposed legislation mandating that a larger percentage of live cattle be procured through negotiations represent a market intervention. We show that live cattle futures market prices could be used as a base in formulas and would be less restrictive in meeting specific cattle procurement percentages. Key Words: cattle prices, mandatory price reporting, thin markets JEL Codes: Q11, Q13, Q18

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