Carcass Quality Volume and Grid Pricing: An Investigation of Cause and Effect

The relationship between publicly reported weekly grid premiums and discounts for specific carcass characteristics and the percentage of those characteristics reflected in total weekly slaughter volume (i.e., proportional slaughter volume) is investigated. Granger Causality and multi-lag VAR models were used to investigate if grid premiums and discounts were efficiently transmitting market signals to producers with respect to carcass quality attributes. The empirical evidence indicates that there is little evidence to suggest that grid prices are providing efficient price signals to buyers and sellers with respect to market valuation of desirable and undesirable beef carcass characteristics.