Factors affecting price differences of cattle in the Southwest

This study was designed to provide estimates of the existing values the livestock market in the Southwest places on various animal and non-animal characteristics. It was anticipated that these estimates would assist the industry in determining the most profitable animals to produce and the most profitable time and place to market the animals. To provide more assistance in decision-making, analyses were undertaken to determine whether price differences associated with certain animal characteristics have changed during the last two decades. Regression equations were utilized to estimate the extent to which selected factors contribute to the price variation of feeder and slaughter cattle in the Southwest. Under a given level of cattle prices, variations in cattle prices would be expected to result from two principal sources: (1) Variations in animal characteristics, that is, weight, grade, market class, and breed type; (2) Variations in non-animal characteristics, that is, market location, lot size, and season of the year. A modification of the least squares regression method allowed the inclusion of discrete variables for the non-continuous variables, such as season and market location. Data used in estimating feeder cattle price differences originated from country auction markets and major regional markets. The data used in estimating price differences for slaughter cattle originated from major regional markets. The price data from auctions used in the feeder cattle analyses covered the period 1966-1968, and the regional market data covered the period 1964-1968. Because of a lack of data for later years, the data for slaughter cattle price difference analyses covered the period 1964-1966. The scarcity of regional market data for later years highlights the rapid change which is occurring in the assembly function of slaughter cattle. Processors are increasingly by-passing established marketing facilities and purchasing directly from feedlot operators. However, feedlot operators were still using federal-state live cattle quotations as a primary source of price information in 1967.