2025, Volume 33, Paper 5
ISSN: 1883-5675
Are the United States and Australian Beef Cycles Still Aligned?
Garry Griffith – School of Agriculture, Food and Ecosystem Sciences, University of Melbourne
Selwyn Heilbron – School of Agriculture, Food and Ecosystem Sciences, University of Melbourne; SG Heilbron Economics and Policy Consulting
Chinthani Rathnayake – School of Agriculture, Food and Ecosystem Sciences, University of Melbourne
Abstract
There is substantial global evidence of long-term, predictable price and production cycles in beef cattle industries that are driven by producers’ expectations and biological processes. If future profitability is expected to be higher than the current level, cattle breeding herds are held back from slaughter, leading to an increased number of cattle over several years (herd rebuilding) followed eventually by slaughter of breeding animals and declining herd numbers (herd liquidation), until the rebuilding cycle recommences. The periods of rebuilding are accompanied by higher prices for cattle and reduced beef production, whereas the reverse is the case when herds are being liquidated. These opposite cycles in prices and output last 8-12 years and have been observed in the United States for more than 180 years. Conventional wisdom has been that these beef cycles also existed in Australia, and that the cycles in the two countries were closely connected. Current industry extension advice in Australia still mentions this cyclical influence.
The research reported in this paper, using autocorrelation techniques and more than 50 years of data, confirmed the existence of the 8-12 year cycle in the United States beef industry. However, a similar analysis of Australian beef industry data did not show any evidence of significant regular patterns of the same order of magnitude as the long-term United States cycle. Further, there was no significant relationship between the prices of cattle in the United States and in Australia. The only significant regular patterns revealed in the Australian industry were in the numbers of cattle slaughtered and in cattle prices, and these are for a one-to-three year lag between changes in these series. These trends are indicative of much shorter-term beef industry variability in Australia that is more likely to be caused by the transmission of increasing volatility in world market conditions on the demand side and by increasingly volatile environmental conditions on the supply side. The results suggest the need for a primary focus on market risk management along the beef supply chain.
Keywords: beef cycles, United States, Australia, autocorrelation analysis
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