Cattle Market Notes: Week Ending Feb 14, 2014

Cash Cattle:

Cash prices were mixed this week on limited cash sales. The five-area market price ended Friday at $141.99 and $223, respectively for live and dressed. Kansas was the only region to report any noticeable cash trade at $142 live.

Oklahoma City continues to suffer from the winter weather as trade volume was limited again. Feeder cattle traded steady to $2 higher and calves were too limited to call a trend but generally higher. In Mississippi auction markets this week, calves were mostly steady, while feeders were steady to $4 lower.

Futures Prices:

Live cattle futures ended the week ended the week steady to mildly higher and feeder contracts were roughy $2 higher. Cattle futures remain under pressure from weakness in the cash and beef markets. Strength in equities lifted prices as traders typically tie these to beef demand.

Corn futures were mixed with nearby contracts higher while deferred contracts were lower. This week’s supply and demand report (released Monday) showed fewer bushels available than expected, however markets reacted in the opposite regard. The report is summarized here (link). Exports, however, remain above current forecasted levels.

Beef:

Wholesale boxed beef was weak once again. The weekly average Choice price was $208.83, down $7.47, Select averaged $207.90, down $7.45. With both down about equally the Choice-Select spread was mostly unchanged at $0.92.

Livestock and Feedstuff Price and Production Information is available at: link

Note: Unless otherwise stated, cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel.

Drugs and Deforestation

What happens when it becomes more costly to conduct narcotics-trafficking operations in Mexico due to a government crackdown?

A new report says that drug smuggling in Central America is rapidly increasing rates of deforestation.

Remote forests in Honduras and Guatemala are being cut down to facilitate landing strips for the transportation of narcotics.

The scientists believe the influx of drug cash encourages ranchers, timber traffickers and oil palm growers to expand their activities.

But according to the researchers, the importance of the area as a route for trafficking has increased significantly over the past seven years after acrackdown on the narcotics trade in Mexico.

This prompted drug traders to move their operations into more remote areas in countries like Honduras, Guatemala and Nicaragua.

Source: BBC News

Answer: You move operations elsewhere. Unfortunate but true.

Extension Service Reports Serve as “Informational Text” for Teachers

Teachers and administrators throughout the US are learning how to implement the latest innovation in education. The aim of the voluntary Common Core State Standards (CCSS) is to increase the competitiveness of the U.S. in the global marketplace by requiring students to practice the higher ordered thinking skills necessary in the 21st century. Its goal is to produce nation-wide academic benchmarks for students. Forty-five US states have signed up to adopt this voluntary program.

The CCSS is not a federal program, but is an effort of the National Governor’s Association Center for Best Practices, the Council of Chief State School Officers, private businesses, parents and students. The CCSS includes the use of “Informational Text” competencies, which returns non-fiction text to the center stage in the language curriculum. Written to inform a general audience, Extension Service resources (http://msucares.com/) provide the perfect source of informational text needed by today’s teachers.

Internationally benchmarked and based on research and evidence, the CCSS are aligned with college and career expectations and are more rigorous than outgoing standards. The new language standards focus on much more than just reading comprehension; they emphasize “close” reading, writing, speaking, and listening. The new math standards focus on precise thinking, data-driven decision making, and interpreting and analyzing data within charts. The new standards emphasize the skills needed to succeed in today’s dynamic economy: global awareness; economics, personal finance, and entrepreneurship; literacy in civics, health, and the environment; innovation skills of critical thinking and problem solving; technology skills of information, media, and technology literacy; and life skills of flexibility, adaptability, initiative, self-direction, diversity and tolerance, productivity and accountability, leadership and responsibility.

Anyone familiar with the vast resources Extension offers will immediately see how Extension Service materials are a natural source of informational text. Extension materials are written to the general citizenry, making them accessible to teachers and proficient readers at young ages. Additionally, Extension Service materials explain local phenomenon that naturally interest students. Even a quick look at http://msucares.com/pubs/index.html produces a plethora of material that teachers can use to meet language, math, science, and social studies standards. Currently, the Mississippi State University Extension Center for Economic Education and Financial Literacy and the Office of Agricultural Communications are working together to identify excellent sources of informational text, making it easier for teachers to quickly find and implement Extension publications in the classroom. Contact Dr. Smith at becky.smith@msstate.edu for further information and look for future posts with specific details.

Ronald Coase, of Coase Theorem fame, Dies.

From the New York Times: (Ronald H. Coase, ‘Accidental’ Economist Who Won a Nobel Prize, Dies at 102)

Ronald H. Coase, whose insights about why companies work and when government regulation is unnecessary earned him a Nobel Memorial Prize in Economic Science in 1991, died on Monday in Chicago. He was 102.

He introduced the concept of transaction costs — the costs each party incurs in the course of buying or selling things — and showed that companies made economic sense when they were able to reduce or eliminate those costs by performing some functions in-house rather than dealing in the marketplace.

In the second of his groundbreaking papers, “The Problem of Social Cost,” published in 1960, Professor Coase challenged the idea that the only way to restrain people and companies from behaving in ways that harmed others was through government intervention. He argued that if there were no transaction costs, the affected parties could negotiate and settle conflicts privately to their mutual benefit, and that fostering such settlements might make more economic sense than pre-empting them with regulations.

The paper made the idea of property rights fundamental to understanding the role of regulation in the economy.

The Coase Theorem is a central theorem in environmental economics.  It states that, in the presence of an externality (e.g. I’m yelling loudly in the Junction and you’re annoyed), if there is (1) low transactions costs (we can speak to each other easily), (2) perfect information (we both know the benefits and costs to each other of my yelling), (3) and clear property rights (either I have the right to yell or you have the right to not hear my yelling), the two parties can bargain and an economically efficient outcome will result.  An economically efficient outcome is one in which the benefits to society (in this silly example, that’s just you and me) minus the costs to society are greatest.

If the conditions for the Coase Theorem hold, it means that, theoretically, there’s no need for government regulation or intervention to resolve the issue (assuming all we care about is economic efficiency, that is).  The question is always whether or not the conditions hold.