Do Agricultural Market Advisory Services Beat the Market?

The purpose of this paper is to address two basic performance questions for market advisory services: 1) Do market advisory services, on average, outperform an appropriate market benchmark? and 2) Do market advisory services exhibit persistence in their performance from year-to-year? Data on corn and soybean net price received for advisory services, as reported by the AgMAS Project, are available for the 1995, 1996 and 1997 marketing years. Performance test results suggest that, on average, market advisory services "beat the market" for the 1995 through 1997 corn and soybean crops. Possible explanations for this result include: i) a unique time period in corn and soybean markets, ii) inefficient commodity markets, iii) the skillfulness of advisory services or iv) a return to risk. The predictability results provide little evidence that advisory service pricing performance can be predicted from year-to-year. When services are grouped by performance quartile, some evidence of predictability is found for the poorest performing services, but not for top performing services.