Do Livestock Markets Still Value USDA Information?

The informational value of U.S. Department of Agriculture (USDA) livestock reports for cattle and hogs futures markets is analyzed to determine potential impact of increased market concentration seen in the livestock industry over the last three decades. Both market surprises, the difference between the USDA’s and private analysts’ forecasts, and price reactions to those surprises are analyzed for possible changes over time using sub-period analysis and rolling-window regressions. The results suggest that while the market surprise component of the reports decreased over time for both Cattle on Feed and Hogs and Pigs reports, the price reaction to those surprises increased in the early 2000s, suggesting that USDA reports still provide valuable information to market participants beyond private analysts’ expectations