Question
A packer buyer is looking at a pen of cattle that they believe will grade 15% Prime, 65% Choice, 20% Select, and 75% CAB.
A packer buyer is looking at a pen of cattle that they believe will grade 15% Prime, 65% Choice, 20% Select, and 75% CAB. They also think there are 15% yield grade 4, 10% yield grade 1 & 2, and 5% will have carcasses that are over 1,050 pounds. They have the following information, all in $/cwt of carcass weight. Base: Choice Yield Grade 3 = $265.00. Yield Grade 1 & 2 = +$5.00. Yield Grade 4 = -$11.00. Prime = +$16.00. Select = -$15.00. Carcasses > 1,050 pounds = -$16.00. CAB = +$5.00. The cattle producer wants a flat "in-the-meat bid. How much should the packer buyer bid for the cattle?
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