Many cattle producers and producer organizations are concerned that the live cattle negotiated market has become too thin. The percentage of live cattle procured through direct negotiations has declined below 20%, while the percentage procured through formulas has increased to more than 60%. Most formulas are based on directly negotiated cattle prices. Proposed legislation mandating that a larger percentage of live cattle be procured through negotiations represents a market intervention. We show that live cattle futures prices are good proxies for negotiated cash prices, while being less restrictive for meeting proposed cash cattle procurement percentage requirements.

This research examines whether mandatory price reporting (MPR) impactedprice relationships among U.S. hog markets. Markets are cointegrated beforeand after MPR enactment, but not fully integrated in either period. Terminalmarkets adjust to shocks in the Iowa-Southern Minnesota market more quicklyand Iowa-Southern Minnesota prices adjust to shocks in terminal markets moreslowly following MPR enactment. Granger causality tests indicate a causalflow from terminal markets to Iowa-Southern Minnesota prices before MPR anda causal reversal after MPR enactment. These results likely reflectdecreases in volume of negotiated sales, particularly in terminal markets,and greater reliance on mandatorily reported prices for marketinformation.