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Evaluation of Market Thinness for Hogs and Pork

Published online by Cambridge University Press:  26 January 2015

Jason R.V. Franken  and
Joe L. Parcell
Jason R.V. Franken
Affiliation:
School of Agriculture, Western Illinois University, Macomb, Illinois
Joe L. Parcell
Affiliation:
Department of Agricultural and Applied Economics, University of Missouri, Columbia, Missouri
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Abstract

We investigate thinness of hog and pork markets in terms of quantity andrepresentativeness of negotiated transactions. Transactional volume impartsmarginally greater confidence in pricing precision for Iowa-SouthernMinnesota negotiated hogs than for the national carcass cut-out, suggestingthat contracts tying prices to the former rather than the latter may be morerepresentative of industry conditions. Extending mandatory price reportingto pork may remedy this discrepancy. Despite declining volume, terminal hogmarkets may price accurately off of Iowa-Southern Minnesota prices. Hogquality differentials across procurement methods are documented, and qualityof negotiated hogs is shown to decline with declining volume.

Keywords

Chebyshev's inequalityhogsporkthin marketsQ11Q13
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 44 , Issue 4 , November 2012 , pp. 461 - 475
Copyright
Copyright © Southern Agricultural Economics Association 2012

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