This study was an attempt to contribute to price knowledge in the beef cattle sector of the livestock economy. More specifically the objectives were

(1) to determine the most important variables affecting prices of fed cattle in the short run,

(2) to establish the relationship between the important independent variables and prices of fed cattle, and

(3) to develop methods for incorporating the relationships into meaningful short-run predictions of fed cattle prices.

Both the general model formulation decision making process and the specific decisions made in formulating the short-run economic model of the fed beef sector of the economy were described.

Exploratory work was done in developing both quarterly and monthly economic models. Various time lags and alternative algebraic variable forms were investigated. Consideration was given to both seasonally and non-seasonally adjusted data. A model using three seasonally adjusted variables was postulated to explain the variation in seasonally adjusted monthly fed cattle prices (R² = .9955). A detailed statistical analysis was made to establish confidence in the validity of the estimating equation.

In order to make forecasts from the final estimating equation, the independent variables must be estimated. Work was initiated to develop procedures for forecasting the independent variables. This work showed promise for future use but additional refinement and an investigation of estimates for longer time periods are needed.

It is expected that the research developed in this thesis will serve as a basis for more research in short-run price forecasting.