Three essays on the interconnectedness of the North American cattle and hog markets
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[EMBARGOED UNTIL 12/01/2026] The main motivation of this dissertation is to examine market efficiency and market integration within the North American cattle and hog markets through price analysis and partial equilibrium (PE) modeling. The first paper centers on the market efficiency of the Canadian and U.S. cattle and beef sectors by focusing on spatial price transmission and applying cointegration methods to feeder and fed steer prices and beef carcass cutouts values. The results indicate that each price pairing was cointegrated and shared a long-run relationship. However, further testing revealed multiple breakpoints in each of the original price series. To improve upon the test results the steer prices and cutout values were divided into multiple regimes using market information, instead of the statistical breaks. Each pair of series within a given regime that were determined to be non-stationary were then used to build standard and consistent TAR and M-TAR models to simultaneously test for cointegration and symmetry. The results of these models suggest that the prices are all cointegrated within each regime, and in most cases the price adjustments were symmetric, implying market efficiency. However, during the post-BSE to pre-COOL and COOL regimes the results of the fed steer prices and both graded cutout values indicated that there were asymmetric price adjustments, suggesting that one or both of these events contributed to reduced market efficiency. The second paper focuses on the Canadian and U.S. hog sectors and the lack of a national level pork carcass cutout value in Canada. Using weighted averages of monthly trade data (export volumes and values) a constructed pork carcass cutout indicator value was estimated for Canada and another for U.S. to use as a benchmark for validation. The constructed indicator values were compared to the existing prices in the two countries. Analysis of spatial price transmission was done using both correlation coefficients and cointegration methods. The results imply that the slaughter hog prices within Canada and the U.S. are mostly cointegrated, implying the prices move alike in the long run. Additionally, the Canadian constructed indicator value was cointegrated with the U.S. pork carcass cutout value published by the Agricultural Marketing Service (AMS). The third paper exploits the broad lessons about market efficiency and estimates the market impacts of two animal trade disruptions. The Food and Agricultural Policy Research Institute (FAPRI) PE model for livestock and related agricultural commodity and commodity product markets was utilized. The first scenario consists of a permanent shock that removes the current ban on live feeder cattle imports from Mexico to the U.S., due to the presence of New World Screwworm (NWS). The second scenario involves shocking the Canadian hog sector to reflect a hypothetical outbreak of both porcine reproductive and respiratory syndrome (PRRS) and porcine epidemic diarrhea virus (PEDV), similar to what occurred in 2021 and 2022. In both scenarios, the key findings imply a reallocation of slaughter and reallocation of meat production within the North American market rather than a notable change in global cattle and beef or hog and pork markets given the negligible effect on the world beef and pork indicator prices.
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Ph. D.