Does market timing contribute to the cattle cycle?

Recent evidence suggests that cyclical cattle inventories are driven by exo genous shocks. This article examines a second possible contributing factor to the cattle cycle: a market timing effect that arises from individual att empts to maintain countercyclical inventories. The model uncovers an import ant conceptual point: to the extent that cycles are driven by exogenous sho cks, a representative producer should outperform one who maintains a consta nt inventory; whereas, for cycles induced by market timing, a representativ e producer should underperform one with a constant inventory. Simulated net returns over 1974-98 reveal that a constant-inventory manager significantl y outperformed the representative U.S. producer, which indicates that marke t timing influences the cattle cycle.