Livestock Marketing

Price discovery
Pricing methods
Marketing decisions
Supply and demand
Price Determination and Discovery
Price Determination
• is the broad forces of supply and
demand establishing a market clearing
price for a commodity.
Price Discovery
• is the process by which buyers and
sellers arrive a a specific price for a
given lot of produce at a given location
for a specific time period.
Price Discovery

A human process, subject to relative

bargaining power of the buyer and
seller.
Two stage process
• Evaluate S&D and Pe
• Estimate the price for the specific trade.
 Price Determination
and Price Discovery
P S

Pe

Qe Q
Centralized pricing
All buyers and sellers in one place at
one time.
+ Full and immediate information
+ Competitive bidding
+ Equalizes market power
- Transaction cost
- Physical movement of product
Decentralized Pricing
One-to-one negotiations
+ Reduced transportation cost
+ Reduced transaction cost
- Depends on skills and information
- Higher search cost
Hybrid markets
Electronic markets
• Centralized pricing
• Decentralized product movement
Examples
• Satellite auctions
• Electronic auctions
• Tel-o-auction
• E-commerce
Formula pricing
Price discovery from elsewhere
Formula contracts
• Spot market
• Cutout price
• Futures
Do you trust the underlying market for
price discovery?
Performance issues
“Least cost” method of price
discovery
Effect of the mechanism on price
behavior
Marketing v. pricing efficiency
Information and markets

Price reporting
• Role of the government
• Collection and dissemination and timely
reporting of prices that were discovered.
• Other private treaty buyers and sellers
incorporate new information into their
negotiation.
• Facilitates formula pricing
Livestock Marketing Decisions
What to sell
• Live, carcass, grid
Where to sell
• Type of market
• Location
When to sell
• Weight, grade, costs
What to sell
Live weight
• One average price for all live pounds
• Negotiated price before delivery or at
auction
• Weighing conditions important
» Mud, shrink (fill, time, stress)
• Was most common for hogs but not now
• Still common in large cattle feedlots, less
in Iowa
• Used for feeder cattle and feeder pigs
What to sell
Carcass weight (“in-the-meat”)
• One average price for all carcass pounds
• Negotiated price before delivery
• Dressing percent (also called yield)
» Important to compare bids
» Not important in determining value
• Farmer stands risk of trimming and
condemnation
• Common for fed cattle in Midwest
What to sell
Dressing percent
• DP = carcass weight / live weight
• DP hogs approximately 73-76%
• DP cattle approximately 61-64%
DP impacted by:
• Weighing conditions
• Shrink
• Fat thickness
• Genetics
 What to sell
Value-based marketing
• Each carcass evaluated and priced individually
• Premiums and discounts determined ahead of
delivery
• Base price may be negotiated or come from formula
• Carcasses are graded and values assigned
• Farmer stands grading risk
• Different buyers have different systems
• Nearly all hogs
• Increasingly popular for fed cattle
Hog Carcass Weight Discounts
Carcass Weight Range
145# -27.70 -8.16
155# -27.70 -5.00
165# -10.39 -0.67
175# -3.40 0.00
185# -1.36 0.00
195# -0.68 0.00
205# 0.00 0.00
215# -3.00 1.36
225# -5.26 0.00
IOWA/MINNESOTA DAILY DIRECT NEGOTIATED HOG PURCHASE MATRIX
LM_HG204, Fri, Aug 26, 2005, USDA Market News Des Moines, Iowa
 Hog Carcass Price by Backfat and
Loin Eye Area
Hog Carcass Price by Loin Eye Area/depth (inches)
Backfat 4.0/1.4 5.0/1.7 6.0/2.0 7.0/2.3 8.0/2.7
0.40 62.00 75.05 63.50 75.00 65.00 75.00 66.00 76.00 66.00 76.00
0.50 59.50 75.05 62.00 75.05 65.00 75.05 66.00 75.00 66.00 76.00
0.60 59.50 75.60 62.00 75.60 63.50 75.60 65.00 75.60 66.00 75.60
0.70 59.50 75.60 59.50 75.60 62.00 75.60 65.00 75.60 66.00 75.60
0.80 57.50 75.60 59.50 75.60 62.00 75.60 63.50 75.60 66.00 75.60
0.90 57.50 72.10 59.50 72.10 59.50 72.55 62.00 73.05 65.00 73.80
1.00 56.50 72.10 57.50 72.10 59.50 72.10 62.00 72.10 63.50 73.05
1.10 55.50 67.90 57.50 68.05 59.50 69.05 59.50 70.27 63.50 71.66
1.20 55.50 67.90 56.50 67.90 57.50 67.90 59.50 68.87 62.00 70.96
1.40 52.00 64.00 55.34 64.70 55.34 66.09 56.86 67.48 56.86 68.87
IOWA/MINNESOTA DAILY DIRECT NEGOTIATED HOG PURCHASE MATRIX
LM_HG204, Fri, Aug 26, 2005, USDA Market News Des Moines, Iowa
Comparing bids
Price in appropriate $/cwt A B
Bid Price (live) $44.50 ---
Bid Price (carcass) --- $59.50
Lean premium --- +1.25
Sort discount --- -.70
Dressing percentage 74.5 74.5
Adjusted to live 44.50 44.73
Transportation -.85 -.35
Net farm gate price $43.65 $44.38
 Value-Based Cattle Marketing
Three factor impact premiums
1. Carcass Weights
2. Quality Grade Distribution (USDA Grader)
Based on marbling, proxy for eating
experience
3. Yield Grade Distribution (USDA Grader)
Based on lean meat yield
4. Other specs:
Product safety & quality assurance
Acceptable color
Youthfulness
 Percent of Beef Grading Prime, Choice, or Select

80%
70%
60%
50%
40%
30%
20%
10%
0%
J-95

J-96

J-97

J-98

J-99

J-00

J-01

J-02

J-03

J-04

J-05
Prime Choice Select
 Beef Yield Grade Percentages
60%

50%

40%

30%

20%

10%

0%
J-95

J-96

J-97

J-98

J-99

J-00

J-01

J-02

J-03

J-04

J-05
YG 1 YG 2 YG 3 YG 4+5
Value-Based Cattle Marketing

Common Ground for Targets

1. Carcass Weights 550 - 950 lbs

2. Quality Grade > Se+ or > Ch0

3. Yield Grade 1’s and 2’s

Carcass Merit Grid and Premium Trends

Quality Yield Grade

Grade 1 2 3 4&5
Prime +$$$$$ +$$$$ +$$$ -$$
+ o
Choice and Choice +$$$ +$$$ +$$ -$$
Choice- +$$$ +$$ Base -$$$
Select -$ -$$ -$$$ -$$$$
Standard -$$$$ -$$$$ -$$$$ -$$$$
Out Cattle -$$$$$ -$$$$$ -$$$$$ -$$$$$
Where are the Grid Rewards & Discounts?
Iowa Quality Beef Grid 2005
 Base: NE Wted Avg 65-80%
Choice Yield Grade $/cwt
 Par: Ch YG3 =Base + $2.00 or 1: $4.00
Plant clean up which ever is 2: $3.00
greater 3: Par
 Quality Grade $/cwt 4: -$20.00
• Prime: $6.00 5: -$25.00
• Certified Angus: $3.50
Carcass weights$/cwt
• Select USDA Under 500 -$40.00
• Standard -$15.00 500-549 -$15.00
• Commercial -$30.00 950-999 -$8.00
• Dark Cutters -$30.00 1000 & up -$35.00
• Other -$30.00
Comparing Bids ($/carcass cwt)
Price in appropriate $/cwt A B
Base bid price 122.00 121.00
Prime 3% --- +6.00
Top 2/3 Ch 45% --- +3.50
Select 30% --- -8.00
Yield 1&2 60% --- +2.50
Off weight 3% --- -15.00
Transportation -.65 -1.25
Net farm gate price 120.35 120.16
Bid A is a straight in the meat bid, Bid B is a valued-based bid.
Where to sell
Terminal markets have declined
Auction markets important when assembly is
needed
• Feeder cattle and cull cows
• Growing interest in fed cattle in fringe areas
Direct sales
• Slaughter cattle and hogs
• Feeder pigs
• Growing in feeder cattle where source verification
is important
Feeder cattle sales
Live weight sales
• Various weight classes
• In general, lower $/# and heavier weights
Auction is major market
• Assembly function important
Video auctions
Direct trade
Premium paid for
• Large uniform lots
• Certification/verification ??????
Important market functions
Slaughter Cattle and Hogs
Direct sales most common
• Animals are delivered directly to the packing
plant
Spot or cash market
• Seller contacts buyer when ready to sell
• Negotiate price and terms on each group
Contract market
• May be for one group or an ongoing agreement
between buyer and seller
• Terms and pricing method determined ahead of
marketing date
Overview
Define contractual relationship
Evolution and status of hog industry
Describe marketing contracts
Motivation and concerns
Role for economists
Contractual Relationship
Focus today is not on internal transfer
Only relationship is the marketing
contract
Typically 3-10 years in length or evergreen
Defines delivery schedules, carcass
specifications, pricing, and in some cases
production practices
Small portion of contracts have risk
sharing provisions
 USDA MPR Definitions
 Negotiated: Purchased in the cash market for delivery
within 7 days.
 Swine or pork market formula: A formula tied to the
cash market for hogs or pork cutout., i.e., weekly
average price, 3-day rolling average, percentage of the
cutout.
 Other market formula: A formula tied to something
other than the hog market or pork cutout, i.e., feed
prices.
 Other purchase agreement: Currently this includes
window contracts.
Percent of U.S. Hogs Sold Through Various Pricing Arrangements, January 1999-2009*

Year 99 00 01 02 03 04 05 06 07 08 09
Hog or meat
market
formula 44.2 47.2 54 44.5 41.4 41.4 39.9 41.8 38.3 37.1 41.2
Other market
formula 3.4 8.5 5.7 11.8 5.7 7.2 10.3 8.8 8.5 11.0 7.9
Other
purchase
arrangement 14.4 16.9 22.8 8.6 19.2 20.6 15.4 16.6 15.2 13.4 11.6

Packer-sold 2.1 2.2 2.1 2.4 2.6 6.7 6.1 5.6

Packer-
owned 16.4 18.1 17.1 21.4 20 22.7 23.1 25.7
Negotiated -
spot 35.8 25.7 17.3 16.7 13.5 11.6 10.6 10.2 8.6 9.2 8.1
Source; Grimes and Plain, University of Missouri http://agebb.missouri.edu/mkt/vertstud09.htm
Contract Specs

Product specifications
• PQA, Right to approve inputs
Method of pricing
• Which markets and formula
Delivery scheduling
• Short and long term
Exemptions
Types of Contracts
Formula
• Most common contract
• Price tied to another market, typically spot
• No risk share
• Examples:
» 3-Day rolling average of ISM weighted average
+$1.50
» Last week’s average excluding the high and low
» 92% of the previous day pork cutout value
Packer does not share risk
Types of Contracts
Fixed window
• Formula tied to cash price
• Predetermined upper and lower bounds
• Share pain and gain outside window
• Example: $50-60 and split 50/50 above and
below
Floating window
• Formula tied to cash price
• Boundaries move with feed prices
• Do not share outside of window
Packer shares risk
 Weekly Hogs Prices, Cost of Production and Window

$70

$60

$50

$40

$30

$20

$10
Cash COP Floating Window Fixed Window
$-
J-90

J-91

J-92

J-94

J-96

J-98

J-99

J-01
J-00
J-97
J-93

J-95
Types of Contracts

 Cost-Plus
• Price direct function of feed prices
• Fixed amount for non-feed costs + known margin
• Packer assumes all price risk
 Ledger
• Floor price is fixed or based on feed prices
• Producer is “loaned” the difference between floor
and lower cash prices
• Loan is repaid at higher cash prices
• Packer provides line of credit but not risk share
 Weekly Hogs Prices, Cost of Production and Contract

$70

$60

$50

$40

$30

$20

$10
Cash Cost + COP Ledger
$-
J-90

J-91

J-98

J-99

J-01
J-92

J-93

J-94

J-95

J-96

J-97

J-00
Motivations for Vertical Linkages
Consumer satisfaction
Moisture enhanced pork
Preference for attributes
Growing interest in safety and
production
Spot market not sufficient
Premiums and discounts
Market access and risk
Motivations for Vertical Linkages

Traditional IO theory
Avoid market power, reduce price
volatility, technology complements,
minimize transaction costs
Agency theory
Integrate rather than contract to
avoid opportunism and shirking by
contract partners
 Motivations for Vertical Linkages

Asset specificity
Firms with more significant relationship-
specific investments (RSI) benefit from
predictable throughput and prices
As assets become more specialized, the
costs of using the spot market increases
Costs are particularly high when food safety
and product quality problems occur
encouraging greater process control
 Accumulated Net Estimated Returns
One Hog Sold per Month
400

300 $564 drop in

28 months
200

100

0
J- J- J- J- J- J- J- J- J- J- J-
-100 93 94 95 96 97 98 99 00 01 02 03

-200
Attitude Toward Marketing Contracts by
Pork Producers with and without Marketing
Contracts
1 = strongly disagree, 6 = strongly agree

With Without
Coordinate slaughter to better meet Industry needs 3.7 2.9
Have caused lower cash market prices 4.2 4.2
Producers with contracts have received higher prices 3.9 3.5
Packers show preference in who was offered a contract 3.5 3.5
Contracts should be made illegal by Congress 2.7 3.1
Contracts should be more closely monitored by USDA 4.0 4.0
Prefer to market all my hogs on the cash market 3.0 4.1
 Role for Economists
The information and characteristics that
consumers are demanding may require
tighter vertical linkages.
 Can the spot market provide the non-
measurable process control for
consumers?
 If so, at what cost?
 Who will pay the added costs?
 Will greater control speed consolidation?
 Role for Economists

The great success of formula pricing

contracts is likely to lead to its demise.
Producers want an agreement, but
fear thin markets.
How much volume is needed for
satisfactory price discovery?
Where should it take place?
Who should be involved?
 Role for Economists
Concerns about contract linkages
negatively affecting prices
Research is inconclusive on price
impacts.
Thin market implications.
Arguments have been greater in the
industry where there is less
contracting.
Politically charged debate.
Contract Examples
Iowa Attorney General
• http://www.state.ia.us/government/ag/ag_contracts/

Contract concerns
• Will discuss more in market controversy
section
 Share of Reported Pig Sales by Weight
Feeder Pig Trade
70%
Price/head or live weight
60%
40-60 pound classes
50%
Weaned pigs (10-12 pounds)
40%
Primarily direct trade
30%
Rapidly declining auctions
20%
Health and stress concerns
10%
Premiums for
0%
2000 2001 2002 2003 2004 Large uniform, single source
EW 40 50 Genetic history
Weaned Pig Weekly Volume by Formula and Spot Pricing
100000
90000
Spot market price 80000
Formula Spot

Often through a broker 70000

USDA report 60000
50000
Formula pricing
40000
Based on observable price 30000
Spot market 20000
Hog futures maybe corn & SBM 10000
0
8/13/04

4/13/05
8/13/05

4/13/06
8/13/06

4/13/07
8/13/07

4/13/08
8/13/08

4/13/09
8/13/09
12/13/04

12/13/05

12/13/06

12/13/07

12/13/08

12/13/09
When to sell
 Classic production function
• Optimal selling weight is where MC=MR
• The cost of the next pound = the price of the next pound
 Cost per pound decrease then increase with weight
• Costs are a function of
» Genetic potential
» Cost of diet
» Opportunity costs of future production
 Price per pound increases then decreases
• Weight discounts outside optimal range
• Fatter carcasses are discounted
• Adding extra weight
Market timing
Cycles
Seasonals
Marginal costs and returns
Biological and price cycles
Cycle is a pattern that repeats itself
over a period longer than a year in a
relatively predictable pattern
 JANUARY 1 TOTAL CATTLE INVENTORY
U.S., Annual
Mil. Head
140
130
120
110
100
90
80 2009 = 94.5 Million Head
-1.6 Percent

70

4 9 54 59 64 69 74 79 84 89 94 99 04 09
19Livestock
19Marketing
19 Information
19 1Center
9 19 19 19 19 19 19 20 20
Data Source: USDA/NASS
 TOTAL CATTLE INVENTORY BY CYCLE
U.S., January 1
Mil. Head
135 1938-
125 49
1949-
115 58
105 1958-
67
95 1967-
85 79
1979-
75 90
65 1990-
04
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 2004-
09
 US December Market Hog Inventory (1,000) head
65,000

60,000

55,000

50,000

45,000

40,000
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
 US December Hog Breeding Herd (1,000 Head)
10,000
9,500
9,000
8,500
8,000
7,500
7,000
6,500
6,000
5,500
5,000
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
What causes cycles
Response to economic signals
Time lag
• Psychology
• Biology
• Investment
Livestock
Tree crops
Land development
Cattle Cycle and Timing
Prices are cyclical
Heifer cost impact profitability
Calf prices impact annual income
Two alternatives
• Steady Size: Same number of heifers
• Dollar Cost Averaging: Same value of
heifers
 Heifer Prices 1970-2008
140
Heifer and Offspring Price Comparison
120
1970's 1980's 1990's 2000's
Heifer Prices ($/cwt.)

100 1975 1985 1995 2005

80 Heifer 27.32 58.64 55.58 114.43

Offspring 1 36.34 76.73 72.86 93.39
60 Offspring 2 64.55 82.44 69.04 108.5
40 Offspring 3 77.33 82.76 80.41 95.38
Offspring 4 66.65 90.63 90.35
20
Offspring 5 57.76 82.89 83.72
0
1970 1975 1980 1985 1990 1995 2000 2005
 Number of Cows and Heifers Calving
140

120

100

80

60
Average
40 DCA 104

20 Steady Size 100

0
70

75

80

85

90

95

00

05
19

19

19

19

19

19

20

20
 Average Value Per Head by Strategy
$800
$750
$700
$650
$600
$550
$500
$450
$400
$350
$300
Steers Heifers Cows

SS DCA
 Return Over Cash Cost
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
$(10,000)
$(20,000)
DCA Steady Size
$(30,000)
70

75

80

85

90

95

00

05
19

19

19

19

19

19

20

20
 Herd Net Worth
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000 DCA Steady Size
$-
70

75

80

85

90

95

00

05
19

19

19

19

19

19

20

20
Seasonal price patterns
Patterns that repeat themselves with
some degree of predictability within
a year’s time frame.
Driven by supply and demand
factors that are impacted by time of
year
• Weather
• Holidays
• Input prices
 Seasonal Price Index for Iowa Fed Cattle and Hogs
115%

110%

105%

100%

95%

90%
Cattle Hogs
85%
.

.
ne

ly
n.

ay

.
.
b.

pr

ug

ec
ct
pt

ov
ar

Ju
Ja

Fe

O
Ju

Se
A
M

D
A

N
$ MC

MR

Weight
Cost of Production
Raised livestock
• Farrow to finish, Cowherd to finish
• Accumulate cost from birth through
finish
• Relatively stable cost over time
• Impacted by input prices and
production
» Feed is typically 60-70% of cost
» Low productivity increases the cost of
those that make it to finish because the
fixed costs are divided by a smaller number.
Cost of Production
Purchased feeder livestock
• Derived demand for feeder animal
• Highly variable price
• Depends upon
» Expected selling price for finished animal
» Feed costs
Cost of production budgets
Starts with production function
Incorporates input prices
Project cost per unit sold
• Variable $/unit
• Total $/unit
http://www.extension.iastate.edu/agd
m/livestock/html/b1-21.html
Swine Production - Finishing Weaned 12 lb Pigs, Total Confinement - One Pig
Ag Decision Maker -- Iowa State University Extension
For more information see Information File B1-21 Livestock Enterprise Budgets.

Place the cursor over cells with red triangles to read comments.
Enter input values in yellow grid-lined cells.

Income Price Unit Quantity Unit Total

Market Hogs $0.00 per lb x 260 lbs = $0.00

Variable Costs Price Unit Quantity Unit

Weaned Feeder pig $32.00 per head x 1 head = $32.00
Interest 9% 4.9 months = $1.18

Feed Costs
Corn $3.80 per bu x 9.8 bu = $37.24
Soybean meal $0.15 per lb x 119.0 lbs = 17.85
Dried distiller grain $0.06 per lb x 32.0 lbs = 1.92
Vitamin & minerals $0.45 per lb x 14.4 lbs = 6.48
Pre-nursery diet 3.00
Feed Additives 3.00
Feed processing & delivery 6.75
Other 0.00
Total Feed Costs $76.24
 Veterinary and medical $5.00
Fuel, repairs, utilities 4.20
Marketing, miscellaneous 4.00
Other 0.00
Manure application cost $0.01 per gal 220 gal = 2.20
Interest on variable costs 9% 3 months = 1.03
Death loss 0.05 head = 1.60
Labor $14.00 per hour 0.7 hours = 9.80
Total Variable Costs $137.25

Income over Variable Costs ($137.25)

Fixed Costs
Facilities & equipment $11.28

Total All Costs $148.53

Income over All Costs ($148.53)

Break-even selling price for variable costs $52.79 per cwt

Break-even selling price for all costs $57.13 per cwt
Using budgets in planning
Project a breakeven “point estimate”
Sensitivity analysis for key variables
Back calculate from revenue to what
you can afford to pay for feeder animal
Economic v. Financial costs
Objective Based Pricing Strategy
Cost/hd $/cwt
Feeder & Financing 729.24 60.77
+ Feed Costs 186.71 76.33
+ Operating Costs 30.46 78.87
+ Labor Costs 36.55 81.91
+ Fixed Costs 24.63 83.96
+ Desired Return 25.00 86.05
550# steer calf fed to 1200 slaughter weight
How much to pay for feeder animal
Work back from total revenue
Cost/hd $/cwt
Expected revenue 1020.00 185.45
- Interest Costs 41.74 177.87
- Feed Costs 186.71 143.92
- Operating Costs 30.46 138.38
- Labor Costs 36.55 131.74
- Fixed Costs 24.63 127.26
- Desired Return 25.00 122.71
550# steer calf fed to 1200 slaughter weight
Breakeven Purchase Price for 550# Steers

Fed Cattle Price

FCOG $81 $83 $85 $87 $89
24.72 119 123 127 131 136
26.72 117 121 125 129 133
28.72 114 119 123 127 131
30.72 112 116 120 125 129
32.72 110 114 118 122 126
Corn WDGS hay int yard other
$1.75 $32.00 $50 7% $0.30 $30
Supply
Derived from cost function
• Production function
• Input - output relationship
Assume that firms seek to
• Maximize profits
• Minimize costs
Supply starts will individual firm
Market supply curves

S1 Move from A to B is a
Px S2
A change in quantity
supplied due to a price
decline.

B
C
Move from B to C is a
shift in supply.

Qx
Supply Shifts from Change
in input prices
in returns for competing enterprises
in price of joint products
in technology on yields or costs
in yield and/or price risk
institutional constraints
SUPPLY DOES NOT CHANGE DUE TO A
CHANGE IN PRICE OF THE OUTPUT
Demand considerations
Demand for meat by consumers
Derived demand for animal by
packers
Derived demand for feeder livestock
by feedlots and finishers
Law of Demand
All else equal consumers will by more
of a item at lower prices and buy less at
higher prices.
Demand begins with individual
consumer
Inverse relationship between quantity
and price
• Two dimensional, Price and Quantity
Downward Sloping
Demand Curve
Px
A
PA

PB B

QA QB Qx
 BEEF PRICE-QUANTITY RELATIONSHIP
$/lb Annual, Retail Weight, Deflated Choice Retail Price
4.40
4.20 04
05 83
4.00 08 03 84
07
06 91 90 89
3.80 93 01 88
92 87 85
3.60 94
02 86
9500
3.40 96
97 99
3.20 98

3.00
62 67 72 77

Livestock Marketing Information Center

Factors that Cause a Shift in Demand
Price of substitutes
Price of complements
Consumer income
Taste and preferences
Population and exports
Government intervention
IS NOT FUNCTION OF THE GOOD’S OWN
PRICE
 Derived Demand
Vertical distance is the difference
S is price at 3 levels
There is cost associated with
moving from one level to the next
Px

Pretail

Pwholesale
Pfarm Dretail Cuts of meat

Dwholesale Carcasses

Dfarm Animals
Q Qx
Derived Demand for Pork
Average retail price $/lb $2.50
Value of trim and scrap $/lb $0.10
Costs from whlse -retail $/lb -$1.00
The most retail will pay $/lb $1.60
Retail pounds per carcass 100
The most retail will pay $/head $160
Derived Demand for Hogs
Wholesale carcass value $/hd $160
Value hide and offal $/hd $25
Costs to slaughter and fab $/hd -$20
The most packer will pay $/hd $165
Wholesale pounds per carcass 200
The most packer will pay $/lb $82.50