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Abstract
The agricultural economics literature, both academic and trade, has discussed the
assumed presence of cycles in livestock markets such as cattle and hogs for a very long
time. Since Jarvis (1974), there has been considerable discussion over how these cycles
impact optimal economic decision making. Subsequent studies such as Rucker, Burt, and
LaFrance (1984), Hayes and Schmitz (1987), Foster and Burt (1992), Rosen, Murphy, and
Scheinkman (1994), and Hamilton and Kastens (2000) have all investigated some aspect
of how biological factors, economic events, or economic actions could be causes of and/or
responses to cycles in hog and cattle inventories. There has also been debate, again both
in the academic and trade literature, over the length of the cycle(s) present in hog and
cattle stocks. To provide both academics and producers with accurate information on the
number and periods of cycles that might be present in hog and cattle inventories, this
paper provides a purely statistical view of the matter.
Using over 140 years of annual data on cattle and hog inventory levels, we estimate
Bayesian autoregressive, trend-stationary models on cattle inventories, hog inventories,
and the growth rate of cattle inventories. We then use those models to find the posterior
distributions of both the number of cycles present in each series and the period lengths of
those cycles. We find multiple cycles present in all three series. Cattle inventory results
show clear evidence in favor of 4.5, 6, and 11 year cycles with other cycles present but not as
clearly identified. Hog inventory results identify five cycles with periods of approximately
4.5, 5.4, 6.8, 10 and 13 years. The data on the growth rate in cattle stocks has similar
cycles to the series on the stock levels.