Abstract
Losses suffered by Texas feedlots in the fourth quarter of 2001 and the first half of 2002 warranted an investigation into the trends in the Texas cattle industry and the causes behind them. It is hypothesized that tight packer capacity has led to a decline in competition that depresses the Texas fed cattle price. This research focused on two main objectives. The first objective was to map out the trends in the Texas cattle feeding industry and develop a model to use in making conditional forecasts of that industry. Data were used from January 1992 through April 2003 to encompass the current cattle cycle. The second objective was to use directed acyclic graphs and vector autoregression to determine the causal flows and dynamics among fed cattle prices, fed cattle marketings, and fed cattle slaughter rates in Texas. Forecast error decompositions and impulse shock graphs were used to show the causes of variation within each variable and to demonstrate the effects of shocks to the system. A discrepancy between cattle marketings and slaughter capacity in Texas was shown by the forecasts. Texas fed cattle marketings are expected to increase at a faster rate than Texas fed slaughter rates. Therefore, in future years the tight capacities of packers are expected to become even tighter. Causal flow was shown to move from Texas fed slaughter rates to Texas fed cattle marketings to Texas fed cattle price. Texas fed slaughter rates were found to be highly exogenous and to dominate information discovery in the model.
Menzies, Max Duery (2004). Investigating the growth of the Texas cattle feeding industry and the possible need for additional slaughter capacity. Master's thesis, Texas A&M University. Available electronically from
https : / /hdl .handle .net /1969 .1 /ETD -TAMU -2004 -THESIS -M372.