Abstract

This paper aims to evaluate the factors that influence the future price of live cattle in the Brazilian market. To this end, we employ an autoregressive distributed lag (ARDL) approach because of its ability to handle variables with different orders of integration. Additionally, the ARDL model enables the distinction between short-term and long-term effects. We use the international price of live cattle, macroeconomic variables (e.g., exchange and interest rates), and the price of inputs (e.g., corn and wheat) as potential explanatory variables. Our findings indicate that the international price of live cattle does not significantly impact the formation of the domestic price in the Brazilian market. Conversely, the dynamics between domestic supply, represented by slaughter cattle, and domestic demand, represented by the economic activity index, are key drivers of the future price of live cattle in Brazil.

This work is licensed under a Creative Commons Attribution 4.0 License.