Abstract
Prices of agricultural products often vary in relatively stable recurring patterns around their long-run trends. These variations translate into fluctuations of selling prices as well as farm revenues. We provide an overview of the current literature on agricultural price cycles. Using a transparent and reproducible structural model selection process and the Kalman filter, we select optimal models and estimate the cyclic patterns of pig and cattle prices for Brazil, Chile and Uruguay. Durations of cycles in pig and cattle prices is found to respectively be about three years and seven years. These durations are in line with literature and the biological limitations of livestock production. This knowledge can inform producers with forecasts on price developments in the short run. It is useful for guiding policy makers on the timing of policy interventions for influencing the duration or the amplitudes of cycles. The price spikes in many agricultural commodities experienced simultaneously at the global scale in 2007/2008 have substantially increased the interest in the phenomenon of synchronized movements of agricultural prices. Nevertheless, agricultural economics literature has scarcely devoted attention to the measurement of such synchronization. We fill this gap by measuring various aspects of synchronization between the cyclical components of pig and cattle prices of three Latin American countries for a period of almost 30 years using the concordance index methodology. We also assess potentially temporally varying stability, symmetry and permanence of synchronization. Synchronization between pairs of pig or cattle price cycles is found to be of moderate level: prices moving into the same direction during about two thirds of the observed periods. Synchronization appears to be fairly instable between the price cycles of one commodity across countries as well as across commodities within one country. The instabilities in synchronization tend to be asymmetric. These findings indicate that governments would profit from expanding their institutional efforts for monitoring agricultural and food prices.
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