An analysis of Tennessee feeder pig prices

The primary objective of this study was to develop an econometric model employing theoretically relevant economic variables which would explain price (expressed in $/cwt) variations in and among selected Tennessee feeder pig markets. Two equations were defined for this purpose—one to show the impact of expected prices of hogs and com on feeder pig prices and another to show the effects of cross sectional variables on geographic price differentials. Data were obtained from the U, T. Extension Service and U. S. D. A.'s "Livestock Market News." Least squares regression was used to estimate the coefficients of the two equations. The expected prices of hogs and corn were shown in the first equation to have positive and negative influences respectively on feeder pig prices. Dummy variables were incorporated into this equation to estimate the price differences due to location. It was shown in a second equation that three cross section variables—quality, weight, and number of head—explained approximately 85 percent of the differences revealed in the first equation. The coefficients for quality, weight, and number of head were positive, negative, and positive respectively. These results agreed with a priori expectations. The only insignificant coefficient was that for quality in the second equation. It was concluded that this was due to variations in grading standards among markets.