Livestock, Dairy, and Poultry Outlook No. (LDPM-11801) 30 pp

May 2004

Beef and Pork Values and Price Spreads Explained

Livestock and meat prices vary more in the short run than costs of production, processing, and marketing. ERS research shows that month-to-month changes in livestock and meat prices are driven by dynamic adjustment. It takes time for prices to adjust, and they tend to adjust more rapidly when they are increasing than when they are decreasing. When rates depend on direction, price adjustment is called asymmetric. The slow and asymmetric adjustment of prices does not appear to work against livestock producers. This report examines these price transmission issues and also explains price spread calculations and analyzes the relationship between marketing costs and livestock prices in the long run.

Keywords: beef and pork price spreads, asymmetric price transmission, livestock prices, wholesale meat prices, retail meat prices

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