Monthly Steer and Heifer Supply

Abstract

Abstract The manner in which producers form price expectations is often a destabilizing influence on observed prices. Recent price trends are extrapolated, leading to delayed or accelerated marketings which reinforce the existing price trend. An analysis of monthly steer and heifer slaughter yields this conclusion. The theoretical framework links capital theory with the hypothesis concerning extrapolation of price trends. Apparent conflicts in previous studies of the short‐term response of slaughter to prices are clarified and partially resolved by the theoretical and empirical results.