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superior good. Additional equations are required in order to predict

levels of the livestock output variables two quarters ahead.

 Non-fed slaughter is largely composed of cull cow slaughter and

some grass-fed steers and heifers. Slaughter levels for this category

typically increase when cow-calf operations are being reduced and when

the price-cost outlook does not favor feeding out young animals. Thus,

lagged prices for the fed product and feed costs (representing a major

input) are expected to influence relative levels of non-fed slaughter.

As fed steer prices fall and/or costs increase, non-fed cattle slaughter

should increase.

 Movements in the price and cost variables mentioned above are

expected to have an opposite effect on fed cattle slaughter. There-

fore, non-fed slaughter levels are hypothesized to be inversely related

to slaughter of the fed category. In addition, variables which represent

the number of feeder animals put on feed quarterly and seasonal patterns

in fed cattle marketing are included. Although not all animals put on

feed are automatically slaughtered within a fixed amount of time, lagged

levels of this variable provide valuable information as to current fed

slaughter levels.

 For pork production, farrow to finish operations require about

 six months so lagged values of farrowings are good indicators of current

 production. Data are available on sow farrowings by quarter for the

 major pork producing states. Lagged prices provide a measure of the

 expected profitability foreseen by producers and, thus, should be

 positively correlated with current production.