Corn price effects on cost of gain for feedlot cattle: Implications for breakeven budgeting

Citation
Jd. Anderson et Jn. Trapp, Corn price effects on cost of gain for feedlot cattle: Implications for breakeven budgeting, J AGR RESOU, 25(2), 2000, pp. 669-679
Citations number
9
Categorie Soggetti
Agriculture/Agronomy,Economics
Journal title
JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
ISSN journal
10685502 → ACNP
Volume
25
Issue
2
Year of publication
2000
Pages
669 - 679
Database
ISI
SICI code
1068-5502(200012)25:2<669:CPEOCO>2.0.ZU;2-H
Abstract
Elasticities calculated from an econometric model of cost of gain (COG) for cattle infeedlots indicate that COG is considerably less responsive to cor n price changes than breakeven budgets assume. This difference in elasticit ies can lead to substantial errors in COG estimates obtained from budgeting . Size of error will depend upon the initial corn price and the magnitude o f corn price change. Given average corn price levels and month-to-month cha nges, the error in budget-based net revenue projections will be about $3/he ad.