FAYETTEVILLE, AR – “There is no statistically significant relationship between negotiated cash trade volume and either fed cattle prices or beef marketing margins” is the conclusion of a recent study by three economists at the University of Arkansas.
According to the study, while Alternative Marketing Arrangements (AMAs or formula pricing) have become the dominant means of trading fed cattle, market data from the last decade give no indication of a positive causal relationship between negotiated trade volumes and fed cattle prices.
Actually, while negotiated sales decreased steadily between 2002 and 2015, the decline coincided with a substantial increase in prices with record cattle prices in 2014 and 2015 corresponding to the lowest negotiated sales recorded.
“In short,” the economists suggest, “AMAs do not allow beef packers to increase beef margins and lower cattle prices.”
(SOURCE: All Ag News)
