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Market Reactions to USDA Reports: State Analysis of Corn Price Response

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  • Taylor, Christopher W.
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    This article reviews the current literature on USDA farm-level data reports and looks at the impact of information contained in the USDA Crop Production report on U.S., Iowa, Illinois, Nebraska, North Carolina, and Wisconsin corn prices. A hypothesis is tested concerning the significance of the reaction to the corn basis from the report. The hypothesis is tested using maximum-likelihood parameter estimates of the effect of stocks data, previous year's production number, and separate dummy variables for the August, September, October, and November release of the USDA Crop Production report on the absolute percent change of the corn basis from the month before the report is released to the month in which the report is released. Evidence is found that supports the hypothesis that USDA reports significantly affect the corn market at the national level and in Illinois, Iowa, and Nebraska. August and October are found to be the most significant month for market reactions to the report for the states affected. No evidence is found of a price reaction in the North Carolina and Wisconsin corn markets. The study period is 1949-2011.

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    Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 124661.

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    Date of creation: 2012
    Handle: RePEc:ags:aaea12:124661
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    1. J. Bruce Bullock, 1976. "Social Costs Caused by Errors in Agricultural Production Forecasts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 76-80.
    2. Olga Isengildina & Scott H. Irwin & Darrel L. Good, 2006. "Are Revisions to USDA Crop Production Forecasts Smoothed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1091-1104.
    3. Miller, Steve, 1979. "The Response of Futures Prices to New Market Information: The Case of Live Hogs," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 11(01), pages 67-70, July.
    4. Brian D. Adam & Philip Garcia & Robert J. Hauser, 1996. "The Value of Information to Hedgers in the Presence of Futures and Options," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 18(3), pages 437-447.
    5. Bailey, DeeVon & Brorsen, B. Wade, 1998. "Trends In The Accuracy Of Usda Production Forecasts For Beef And Pork," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(02), December.
    6. Allen, P. Geoffrey, 1994. "Economic forecasting in agriculture," International Journal of Forecasting, Elsevier, vol. 10(1), pages 81-135, June.
    7. Kastens, Terry L. & Schroeder, Ted C. & Plain, Ronald L., 1998. "Evaluation Of Extension And Usda Price And Production Forecasts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
    8. 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.
    9. Miller, Stephen E., 1979. "The Response Of Futures Prices To New Market Information: The Case Of Live Hogs," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 11(01), July.
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