A Comparison of South Dakota\u27s Mandatory Price Reporting System to the AMS Voluntary Price Reporting System: An Empirical Analysis for Slaughter Steers Sold on a Live Basis

South Dakota\u27s mandatory price reporting system was implemented to help improve price discovery in its livestock markets. The South Dakota Department of Agriculture collected mandatory price reporting data for 19 months until the federal Mandatory Price Reporting Act superceded [sic] the state\u27s reporting regulations in April of 2001. Collected data on live steers sold on South Dakota\u27s direct markets was acquired and then analyzed to determine if the AMS voluntary price reports were accurately representing transactions in South Dakota markets. Next, the voluntary price data was analyzed to determine if any spatial linkages existed among the various AMS voluntary price reports. The mandatory price reporting data was regressed against five AMS voluntary price reports, and the five AMS voluntary price reports were regressed against each other. The Dickey-Fuller and the Augmented Dickey-Fuller tests were then performed to determine if the individual price series had a unit root and if the combinations of the price series were cointegrated. The empirical evidence shows that the South Dakota mandatory price reporting data was cointegrated with all of the AMS voluntary price reports considered. The results suggest that in the long run, the voluntary price reporting system was reflecting transactions in South Dakota market for slaughter steers sold on a live-weight basis. The empirical evidence also indicates that the AMS voluntary price reports were cointegrated with each other with the exception of prices from the South Dakota Feedlot and the Sioux Falls Live Cattle Auction reports. Hence, most of the voluntary reports had spatial linkages between them. The conclusion drawn from the empirical evidence is that price discovery in the direct market for slaughter steer sold on a live-weight basis was not hindered in South Dakota under the voluntary price reporting system