Canadian Cattle Cycles and Market Shocks |
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| Authors: | Edgar E Twine James Rude Jim Unterschultz |
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| Affiliation: | 1. Post‐Doctoral Fellow, International Livestock Research Institute, C/O IITA East Africa Hub, Dar es Salaam, Tanzania;2. 780‐492‐4890;3. Associate Professor, Department of Resource Economics and Environmental Sociology, University of Alberta, 569 General Services, Edmonton, AB, Canada;4. 780‐492‐5439;5. Professor, Department of Resource Economics and Environmental Sociology, University of Alberta, 529 General Services, Edmonton, AB, Canada |
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| Abstract: | We analyze Canadian beef cattle cycles using time‐series properties of four variables: total cattle inventories, beef cow inventories, beef supply, and beef prices. Our aim is to provide up‐to‐date estimates of the duration of the cycles, and to determine whether or not some of the recent market shocks can be associated with changes in the nature of the cycles. Spectral decomposition of the variables reveals 10‐year cycles in total cattle inventories, beef cow inventories, beef supply, and beef prices. Seasonal and annual cycles are also found in beef supply and prices, respectively. Using intervention analysis, exchange rate appreciation, feed price escalation, and bovine spongiform encephalopathy (BSE) are modeled as pure jumps. Exchange rate and feed price shocks are modeled as having started in 2002 and 2007, respectively, and persisted up to the end of the sample period, while BSE is modeled as a shift for the period 2003 to 2005. We find significant impacts of the three shocks on total inventories, but beef supply appears to have been impacted by exchange rates and BSE. A spectral comparison of the pre‐ and post‐shock periodograms of beef supply reveals a 58% reduction in the peak amplitude of the beef supply cycle. |
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