Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-27T09:51:59.741Z Has data issue: false hasContentIssue false
  • English
  • Français

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
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, J.D., Hudson, D., Harri, A., and Turner, S. “A New Taxonomy of Thin Markets.” Selected paper presented at the Southern Agricultural Economics Association Annual Meeting, Mobile, AL, February 4-7, 2007.Google Scholar
Buschena, D., and McNew, K. “Subsidized Options in a Thin Market, A Case Study of the Dairy Options Pilot Program Introduction.” Review of Agricultural Economics 30,1(2008):103–19.10.1111/j.1467-9353.2007.00394.xGoogle Scholar
Fausti, S.W., and Diersen, M.A. “The Voluntary Reporting System's Ability to Provide Price Transparency in the Cash Market for Dressed Steers: Evidence from South Dakota.” Journal of Agricultural and Resource Economics 29,3(2004):553–66.Google Scholar
Fausti, S.W., Diersen, M.A., and Qasmi, B.A. “Public Price Reporting in the Cash Market for Live Cattle: A Spatial Market Approach.” Agricultural and Resource Economics Review 36,2(2007):336–48.Google Scholar
Fausti, S.W., Qasmi, B.A., Li, J., and Diersen, M.A. “The Effect of the Livestock Mandatory Reporting Act on Market Transparency and Grid Price Dispersion.” Agricultural and Resource Economics Review 39,3(2010):457–67.Google Scholar
Franken, J.R.V., Parcell, J.L., and Tonsor, J.T. “Impact of Mandatory Price Reporting on Hog Market Integration.” Journal of Agricultural and Applied Economics 43,2(2011):229–41.S1074070800004181Google Scholar
Franken, J.R.V., Pennings, J.M.E., and Garcia, P. “Do Transaction Costs and Risk Preferences Influence Marketing Arrangements in the Illinois Hog Industry?” Journal of Agricultural and Resource Economics 34,2(2009):297–315.Google Scholar
Government Accountability Office. Livestock Market Reporting: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed. Report to Congressional Requestors, GAO-06-202, December 2005. Internet site: http://www.gao.gov/new.items/d06202.pdf (Accessed December 12, 2011).Google Scholar
Grimes, G., and Plain, R. U.S. Hog Marketing Contract Study. Columbia, MO: University of Missouri Department of Agricultural Economics, 2005.Google Scholar
Grimes, G., and Plain, R. U.S. Hog Marketing Contract Study. Columbia, MO: University of Missouri Department of Agricultural Economics, 2007.Google Scholar
Hamm, L.G., and March, R. “The National Cheese Exchange: Impacts on Dairy Industry Pricing.” Dairy Markets and Policy - Issues and Options, No. M-7. Ithaca, NY: Program on Dairy Markets, Cornell University, February 1995.Google Scholar
Hayenga, M.L., Gardner, B.L., Paul, A.B., and Houck, J.P. “The Concept of a Thin Market.” Symposium on Pricing Problems in the Food industry (with Emphasis on Thin Markets), NC-117 Monograph 7. North Central Regional Research Publication 261, 1979.Google Scholar
Key, N., and McBride, W. “Production Contracts and Productivity in the U.S. Hog Sector.” American Journal of Agricultural Economics 85,1(2003):121–33.10.1111/1467-8276.00107Google Scholar
Kliebenstein, J.B., and Lawrence, J.D. “Contracting and Vertical Coordination in the United States Pork Industry.” American Journal of Agricultural Economics 77,5(1995):1213–18.10.2307/1243350Google Scholar
Lusdaine, R.L. “Finite-Sample Properties of the Maximum Likelihood Estimator in GARCH(1,1) and IGACH(1,1) Models: A Monte Carlo Investigation.” Journal of Business & Economic Statistics 13,1(1995):1–10.Google Scholar
Mueller, W.F., Marion, B.W., Sial, M.H., and Geithman, F.E. Cheese Pricing: A Study of the National Cheese Exchange. Food Systems Research Group Report. Madison, WI: Department of Agricultural and Applied Economics, University of Wisconsin-Madison, 1996.Google Scholar
Nelson, R.G., and Turner, S.C. “Experimental Examination of a Thin Market: Price Behavior in a Declining Terminal Market Revisited.” Journal of Agricultural and Applied Economics 27(1995):149–60.S1074070800019696Google Scholar
Parcell, J., Schroeder, T.C., and Tonsor, G.T Wholesale Pork Price Reporting Analysis. 2009. Internet site: http://www.ams.usda.gOv/AMSvl.0/getfile?dDocName = STELPRDC5083549 (Accessed January 19, 2011).Google Scholar
Pendell, D.L., and Schroeder, T.C. “Impact of Mandatory Price Reporting on Fed Cattle Market Integration.” Journal of Agricultural and Resource Economics 31,3(2006):568–79.Google Scholar
Perry, J., MacDonald, J., Nelson, K., Hahn, W., Arnade, C., and Plato, G. Did the Mandatory Requirement Aid the Market? Impact of the Livestock Mandatory Reporting Act. September 2005. Internet site: http://www.ers.usda.gov/publications/LDP/Sep05/ldpm13501/ldpm13501. pdf (Accessed December 12, 2011).Google Scholar
Peterson, H.H. “Trading Behavior in a Marginal Organized Market.” Journal of Agricultural and Resource Economics 30,3(2005):449–68.Google Scholar
Plain, R. Personal Communication. Department of Agricultural and Applied Economics, University of Missouri, April 6, 2011.Google Scholar
Schroeder, T.C., and Ward, C.E. “Price Discovery Issues and Trends in Cattle and Hog Markets.” Organized symposium paper presented at the Western Agricultural Economics Association Annual Meeting, Vancouver, British Columbia, June 30, 2000.Google Scholar
Schroeter, J.R., and Azzam, A. “Captive Supplies and Cash Market Prices for Fed Cattle: The Role of Delivery Timing Incentives.” Agribusiness: An International Journal 20,3(2004):347–62.10.1002/agr.20011Google Scholar
Smith, V.L. “Markets as Economizers of Information: Experimental Examination of the ‘Hayek Hypothesis’.” Economic Inquiry 20,2(1982):165–79.10.1111/j.1465-7295.1982.tb01149.xGoogle Scholar
Tomek, W.G. “Price Behavior on a Declining Terminal Market.” American Journal of Agricultural Economics 62,3(1980):434–44.10.2307/1240198Google Scholar
USDA Agricultural Marketing Service Office Personnel. Des Moines, IA: USDA Agricultural Marketing Service, January 5, 2010.Google Scholar
USDA National Agricultural Statistics Service. U.S. Hogs & Pigs - Operations: Number by Size Group. Internet site: http://www.nass.usda.gov/Data_and_Statistics/Quick_Stats_1.0/index.asp (Accessed February 12, 2011).Google Scholar
Vukina, T., Muth, M., Piggott, N., Shin, C., Wohlgenant, M., Zheng, X., Cates, S., Coglaiti, M., Darns, S., Lawrence, J., Taylor, J., and Viator, C. “GIPSA Livestock and Meat Marketing Study, Volume 4. Hog and Pork Industries.” Grain Inspection, Packers and Stockyard Administration. U.S. Department of Agriculture, January 2007.Google Scholar
Vukina, T., and Zheng, X. “Bargaining, Search, and Price Dispersion: Evidence from the Live Hogs Market.” Agricultural and Resource Economics Review 39,3(2010):534–46.Google Scholar
Ward, C.E. “An Assessment of the Livestock Mandatory Reporting Act.” NCCC-134 Conference Proceedings: Conference on Applied Commodity Price Analysis, Forecasting, and Marketing Risk Management, St. Louis, MO, April 17-18, 2006.Google Scholar
Ward, C.E., and Choi, S.C. “Evaluating Potential Changes in Price Reporting Accuracy.” NCR-134 Conference Proceedings: Applied Commodity Price Analysis, Forecasting, and Marketing Risk Management, pp. 169–82, Chicago, IL, April 2021, 1998.Google Scholar
Ward, C.E., Koontz, S.R., and Schroeder, T.C. “Impacts from Captive Supplies on Fed Cattle Transaction Prices.” Journal of Agricultural and Resource Economics 23,2(1998):494–514.Google Scholar
Wellman, A. Highlights of the New Chicago Mercantile Exchange Lean Hogs Futures Contract. University of Nebraska Extension Publication NF96-261, 1996. Internet site: http://digitalcommons.unl.edu/cgi/viewcontent.cgi?article = 1392&context=extensionhist (Accessed March 22, 2010).Google Scholar