Moving to scanner based and quantity-weighted monthly average retail beef price series has changed the price series significantly. Quantity-weighted price levels are lower and more volatile. Perhaps most important, calculated elasticities for the quantity-weighted averages are lower than for the historical simple average data. Elasticity estimates for simple average monthly price data are also larger than for weekly data, raising the possibility that historic demand analyses have significantly overstated own price demand elasticities.

Much of the research in commodity hedging has concentrated upon the development of theoretical models describing the optimum position in cash and futures markets. Other studies have shown that the difference between current spot price and futures price represents the market price for storage, processing services, or both. The revenue stabilizing potential of futures markets for commodities with continuous as opposed to noncontinuous inventories has also received attention. However, very little work or literature is publicly available on how different hedging strategies actually would have performed for a particular commodity over time.

iscussions of a certificate delivery system for live cattle futures intensified in D the late 1970s. The impetus for change came from the continued reluctance of long hedgers to participate in the market and the redelivery of cattle, both of which discouraged participation of long hedgers and distorted perceptions of the supply of deliverable cattle.Under the provisions of the live cattle futures contract, the decisions on whether to deliver and on the location of delivery have always rested with the trader holding a short position. Packers have been the group most interested in participating in the market as long hedgers. Under the physical delivery system, the packers faced the possibility that cattle would be delivered at points some distance from their slaughter facilities.Cattle redelivered one or more times are not a desirable product, and the packers have been reluctant to risk being assigned delivery regardless of the location.Reacting to continued criticism, the Chicago Mercantile Exchange (CME) proposed a certificate system of delivery to the Commodity Futures Trading Commission (CFTC). A certificate system was eventually approved and became effective with the December 1983 live cattle contract.

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Retailers are often criticized for a slow response in retail prices to changes in wholesale beef prices. The unresponsiveness, especially when wholesale and farm prices are declining, is seen as a lack of competitiveness and as a reason for congressional action to regulate behavior of processors or retailers. The validity of the historical analyses of retailer price responsiveness is questionable, however. Traditional Bureau of Labor Statistics (BLS) retail beef prices biased upward and do not account for large volumes sold at discounted prices. This article uses newly available scanner-based quantity-weighted retail prices to suggest that retailers' response to changes in wholesale beef prices is significantly larger and possibly quicker than is shown by traditional BLS measures of retail prices. Recent efforts to prompt legislation to regulate how firms behave along the beef supply chain, which are based only on arguments that retailers are not responding to price changes at the wholesale level, may be inappropriate. [L110, L660, D400] r