The Effect of Quarterly Livestock Reports on Cattle and Hog Prices

The effect of USDA livestock reports on cattle and hog prices was investigated by comparing daily cash and futures price movements during periods just before and just after the release of major reports. Cash prices increase at least as often as they decline after a report, and futures prices are more likely to rise. Also, the futures market appears to be more efficient than the cash market in predicting and assessing underlying conditions in the cattle and hog markets. Quarterly Cattle on Feed and Hogs and Pigs reports released by the Crop Reporting Board of USDA are a primary source of information concerning short run production prospects for fed beef and pork. However, these reports are sometimes a source of controversy among livestock producers, and some farmers are reluctant to respond to the mail survey which is the primary source of information for the quarterly reports. Theoretically, improved market information should improve the efficiency of markets, reduce marketing costs, and therefore raise prices farmers receive for livestock. Not all producers are convinced that the release of this survey information produces this desirable result, however. In fact, some producers feel that the information is more likely to be used to their disadvantage and suggest livestock prices fall more often than they rise after the release of a report. The primary objective of the research reported here was to investigate short-run movements in livestock prices during periods just before and just after the release of the major quarterly reports.