Determinants of Beef Market Price Dynamics

Price dynamics are evaluated to assess evidence of alleged price fixing collusion by the four largest U.S. beef packers starting in 2015. Initial variance screens find that during the period in question retail and boxed beef cutout prices increase and stabilize relative to fed cattle prices, consistent with collusive behavior, but on a much smaller scale than a benchmark case of documented collusion in fish fillet pricing. Boxed beef cutout and Kansas fed cattle prices are cointegrated. Speed of adjustment coefficients from VEC models indicate faster and more significant adjustment of boxed beef cutout prices to Kansas fed cattle prices at rates that remain consistent before and during the period of alleged collusion, while the Kansas fed cattle price adjusts slower to the boxed beef cutout price if at all but improves modestly in the period of alleged collusion Overall, the effects of the Covid-19 pandemic on price dynamics are much larger, and the results suggest collusive behavior to be minimal if any and short lived.