The solid black vertical line indicates the point where MCOOL stopped being enforced by the USDA (just prior to January 1, 2016). Looking at cattle prices, one can see how the claim that the repeal of MCOOL caused a drop in cattle prices came about, as the repeal came right after the peak of fed steer prices, after which prices began to fall rather dramatically.
But, is this just a coincidence? Correlation is not always causation.
The red line in the graph shows the number of steers marketed (I plotted the 6 week moving average to smooth out some of the "jumpiness" in the line). There is a strong inverse correlation between the number of fed steers marketed and the price of fed steers. When more cattle are brought to market, prices fall and vice versa. The correlation coefficient is -0.78 over this time period (January 2, 2000 to early November 2016).
What started happening at almost the exact same time MCOOL was repealed? Producers started marketing more cattle. Here's the thing: one can't create a fed steer overnight. The production decisions that led to the increase in fed steers around January 1, 2016 would have had to have been made around two years before. Were producers so prescient that they could anticipate the exact time of the repeal of MCOOL two years prior? Or, rather, was this a "natural" part of the cattle cycle?
As the above graph shows, producers started having many fewer cattle to sell beginning in '08 on into 2012 for a variety of reasons such as drought and high feed prices. These lower cattle numbers led to higher prices, which in turn eventually incentivized producers to retain heifers and add more supply to reap the benefits of higher prices. When did all those extra cattle start hitting the market? It turns out (largely by chance) that it was the same time MCOOL was repealed.
Let's go one step further. Because the supply of fed cattle is relatively fixed in the short run (as production decisions have to be made many months prior), we can use the above data to get a very crude estimate of the demand for fed cattle. Using just the data shown in the above graph, I find that 81% of the variation in (log) live steer prices is explained by changes in the (log) quantity of steers marketed. Estimates suggest that a 1% increase in the (six month moving average of the) number of steers marketed is associated with a 0.5% decline in live steer prices.
Since the 1st of the year there has been a roughly 120% increase in the number of steers marketed (from an average of around 14,600 head/week just prior to the first of the year to an average of around 32,500 head today), and our simple demand model would suggest that this would lead to a 120*0.5=60% decline in cattle prices. Yet, cattle prices have "only" declined about 25% (from around $133/cwt at the first of the year to around $100/cwt now). So what? Well, if MCOOL was the cause of the reduction in cattle prices, we would have expected an even larger fall in cattle prices than our simple demand model predicted, but instead, we're actually seeing a smaller fall than expected.
Now, let's address one possible criticism of the above discussion. What if the rise in fed steers marketed in the graph above is because of cattle flowing into the US from Canada and Mexico once MCOOL was repealed? Here is data on imports of cattle from Canada to the US (again from LMIC).