Price Determination for Corn and Wheat: The Role of Market Factors and Government Programs
AbstractAnnual models for U.S. farm prices for corn and wheat are developed based on market factors as well as government agricultural commodity programs. The pricing relationships utilize a stocks-to-use modeling framework to capture the effects of market supply and demand factors on price determination. This formulation is augmented by factors that represent the changing role of agricultural policies, particularly government price support and stockholding programs. For wheat, international market effects as well as wheat feed use and related crosscommodity pricing considerations also are included. Model properties and model performance measures are presented. Additionally, recent price-forecasting applications of the models are discussed. The relatively simple structure of the estimated price models and their small data requirements lend themselves to use in price-forecasting applications in conjunction with market analysis of supply and demand conditions. In particular, the models have been implemented into USDAís short-term market analysis and long-term baseline projections. In these applications, the models provide an analytical framework to forecast prices and a vehicle for making consistency checks among the Departmentís supply, demand, and price forecasts.
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Bibliographic InfoPaper provided by United States Department of Agriculture, Economic Research Service in its series Technical Bulletins with number 33581.
Date of creation: 1999
Date of revision:
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Postal: 1400 Independence Ave.,SW, Mail Stop 1800, Washington, DC 20250-1800
Web page: http://www.ers.usda.gov/
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corn; wheat; farm price; price determination; stocks-to-use ratio; price supports; commodity programs; forecasts; Crop Production/Industries; Demand and Price Analysis;
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