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A Comprehensive Evaluation of USDA Cotton Forecasts

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  • Isengildina-Massa, Olga
  • MacDonald, Stephen
  • Xie, Ran
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    Abstract

    This study evaluates all USDA cotton supply and demand estimates for the United States and China (including unpublished price forecasts) from 1985/86 through 2009/10 for accuracy and efficiency. Results reveal that at every stage of the forecasting cycle forecast smoothing was the most widespread and persistent type of inefficiency observed in most U.S. variables. Correlation with past errors indicated the tendency to repeat past errors in most cases. Tendency to overestimate growth was also found. Bias was uncommon and limited to several cases of overestimation of China’s exports and U.S. price and underestimation of China’s domestic use. While forecasts of China’s imports and endings stocks improved, U.S. price and ending stock forecast errors became larger toward the end of the study period.

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    Bibliographic Info

    Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

    Volume (Year): 37 (2012)
    Issue (Month): 1 (April)
    Pages:

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    Handle: RePEc:ags:jlaare:122314

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    Web page: http://waeaonline.org/
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    Related research

    Keywords: cotton; forecast accuracy; forecast efficiency; forecast evaluation; forecast smoothing; USDA forecasts; Agricultural Finance; Crop Production/Industries;

    References

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    1. Isengildina-Massa, Olga & MacDonald, Stephen, 2009. "U.S. Cotton Prices and the World Cotton Market; Forecasting and Structural Change," Economic Research Report 55950, United States Department of Agriculture, Economic Research Service.
    2. Sanders, Dwight R. & Manfredo, Mark R., 2002. "Usda Production Forecasts For Pork, Beef, And Broilers: An Evaluation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), July.
    3. Schnader, M H & Stekler, H O, 1990. "Evaluating Predictions of Change," The Journal of Business, University of Chicago Press, vol. 63(1), pages 99-107, January.
    4. Isengildina-Massa, Olga & Irwin, Scott H. & Good, Darrel L. & Gomez, Jennifer K., 2008. "The Impact of Situation and Outlook Information in Corn and Soybean Futures Markets: Evidence from WASDE Reports," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April.
    5. Falk, Barry L. & Orazem, Peter, 1989. "Measuring Market Responses to Error-Ridden Government Announcements," Staff General Research Papers 11096, Iowa State University, Department of Economics.
    6. Scott H. Irwin & Darrel L. Good, 2004. "Evaluation of USDA Interval Forecasts of Corn and Soybean Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 990-1004.
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    Cited by:
    1. MacDonald, Stephen & Isengildina-Massa, Olga, 2012. "Information Rigidity and Correcting Inefficiency in USDA’s Commodity Forecasts," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124890, Agricultural and Applied Economics Association.

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