The researchers used a combination of descriptive data summaries and statistical estimating methods to identify and describe the factors that determine procurement and pricing practices used in purchasing slaughter cattle, and sources of variation in the costs of cattle purchased. The research found that the spot market continues to dominate transactions.
Large feedlots are also more likely than small feedlots to use the alternative methods.
Procurement and pricing method influenced cattle prices. Forward-contracted cattle received lower prices than spot market cattle, while marketing agreements brought higher prices. Cattle prices also significantly reflected quality and other lot characteristics. The research found that large packers are the major buyers at large feedlots. Large packing plants purchased nearly half of their cattle from large feedlots.