Captive Supply Impact on the U.S. Fed Cattle Price: An Application of Nonparametric Approach

Document Type

Article

Journal/Book Title/Conference

Journal of Rural Development

Volume

34

Issue

3

Publication Date

2011

First Page

103

Last Page

115

Abstract

Conventional regression technique is restrictive because it assumes a specific functional form for the model and the constancy of parameters. Nonparametric method, however, is flexible and supplementary to parametric analysis. In this study, impact of captive supply on the U.S. fed cattle cash market price is investigated via nonparametric analysis. Results indicate that the price effect of captive supply does not appear until its share reaches about 20% of the total cattle procurement. Beyond this point, the U.S. fed cattle price decreases approximately $0.20/cwt ~ $0.40/cwt for each percent increase in the captive supply share.

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