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This paper examines the impact of the U.S. Department of Agriculture’s (USDA) projections of annual corn output on the price of corn futures. We tested if output projections significantly drive responses to the futures market. We also tested if the accuracy of past projections influences market response to the current projections. For each month—from May (planting month) to October (harvesting month)—we estimated a system of equations representing the daily opening, closing, high-, and low-futures prices. These equations test the forecast’s impacts on both price levels and daily variances. We found USDA’s projection of annual corn production influenced future prices and daily variances. The projection moved the future price closer to the October harvest price, and its impact lingered for several days. We found errors in past output projections have only a small effect on the projection impacts on future prices.

In this study we examine changing relationships among maize prices in four global markets. In doing so, we allow the quantity of exports to play a role in both price transmission and price response. That is, we adapt threshold cointegration methods to search for critical export volumes that enhance (or diminish) the role a region’s price plays in the world market. We find that the short run response of prices in both Argentina and Ukraine is influenced by the level of Ukraine’s exports. However the period where Ukraine’s exports reached their threshold coincides with the period that Argentina imposed export restrictions on maize. We also find that there are numerous country specific price thresholds that influence each market’s short run response to a price shock.

China’s poultry production and consumption are growing rapidly, but rising input costs could slow its development. Increases in corn and soybean prices and wages are partially transmitted to rising retail chicken prices in China. Corn and soybean meal appear to be substitutes, and corn prices have a stronger impact on chicken prices than does the price of soybean meal. Modest technical change impacts partly offset the effect of rising input prices. Rising grain prices and wages, reinforced by Chinese currency appreciation, are eroding the international competitiveness of the Chinese poultry industry, The International Food and Agribusiness Management Review is published quarterly by the International Food and Agribusiness Management Association. www.ifama.org

This report estimates the value to U.S. consumers from the increased availability of strawberries, blueberries, blackberries, and raspberries during winter months. Findings suggest that additional supplies of these fruits from domestic off-season and foreign producers are especially valuable to consumers because they occur in winter months, when domestic fruit production is relatively low, consumers’ choices are fewer than during spring, and prices are high. Findings also suggest that consumers would benefit from further reductions in seasonal production cycles. However, consumers receive larger benefits from making off-season berries available (having some berries rather than none) than from increasing supplies to the extent that off-season prices fall to in-season levels.

This study investigates the relationship between cash and future prices of soybeans and soybean meal over periods of high and low price variability. Error Correction models are estimated for each commodity’s cash and futures price. An exogenous measure of price variability is included in the model to determine if variability influences the equilibrium adjustment process. This, in turn, is used to measure the impact of price variability on short run market efficiency and the price discovery process. The analysis is applied to daily cash and futures prices from 1992 to 2013. The findings support the idea that increased price variability increases market adjustment rates and the price discovery process., These represent the work of the authors Carlos Arnade and Linwood Hoffman but may not represent the views of the Economic Research Service or USDA

Growth in the agricultural GDP of four major European countries is compared with US agricultural growth for the period 1974-1993. The agricultural sector's relative prices are taken into account along with economy-wide factor market adjustments. For Denmark, France, Germany and the UK, the effects of declining real prices and changes in input levels on growth in agricultural GDP are relatively small. Total Factor Productivity (TFP) growth appears to be the major contributor to European agricultural GDP growth. In comparison, TFP is the major source of growth in US agricultural GDP, but its rate of growth is lower than the European countries. In contrast, the declining real prices for US agriculture had a relatively large effect on its GDP. However, in recent years, the effects of declining real prices and declining rates of growth in TFP on European agriculture are relatively large. In the longer-run, the relative competitiveness of US agriculture is largely dependent on its ability to sustain and increase growth in TFP. © 1997 Elsevier Science B.V.

This study investigates whether importers of U.S. wheat form an integrated market or a series of segmented markets. Two market integration tests are applied: one based on equilibrium price relationships and one based on disequilibrium price relationships. With the exception of a few importers, both tests tend to agree. This study also seeks to explain the reasons for the wide divergence in prices paid by importers of U.S. wheat. We find that factors such as the class of wheat which is purchased and the size of annual purchases influence pricing. We also find that there continues to be large persistence difference in the prices paid by importers.

Price in agricultural supply equations is usually the expected price. In general, models of agricultural supply response assume that their representation of producer expectations is correct. If this assumption is wrong, the supply response parameter will have embodied within it an estimate of the expected price distortion, biasing the estimated parameter. Furthermore, no effort has been made in existing models to allow for heterogeneous price expectations. In almost every supply model, one price estimate is used to represent the price expectations of hundreds or thousands of producers, which could masks a wide range behavior among heterogenous producers. Rather than assuming the model’s representation of producer expectations is correct, the goal of this paper is to use revealed producer behavior to assist in the estimation of producer’s expected prices. To explicitly address producers’ formation of the expected price, this study jointly estimates the supply equation and the price expectation equation. The empirical application is a pooled time-series cross-section data analysis of U.S. wheat and corn supply data at the county level.

This study takes the standard acreage response model that stems from an expected utility framework, accounting for both price and yield variability, and nests it within a flexible semi-nonparametric (SNP) model consistent with farm-level decision models for computationally tractable results. We use county-level data to estimate the response of farmers’ planting preferences to changes in revenue and other variables.

This study identifies consumer welfare from new brand introductions in the potato chip market. Price and variety effects of new brand introduction are measured by estimating a demand system underlying an expenditure function. Variety effects are positive in most cities, while price effects are generally negative when consumers exhibit some variety preference. Variety effects dominate price effects in most cities; an opposite effect observed in some cities may indicate high entry barriers or joint brand- and price-based marketing strategies. Results indicate that consumers and producers gain from product innovations, but substantial regional variation exists in the distributional effects of new brand introduction.

This presentation summarizes an AAEA poster.

Consumers responded to the Food and Drug Administration’s September 2006 warnings to avoid eating spinach because of possible contamination with E. coli O157:H7. While spinach expenditures fell, consumers turned to other leafy greens as substitutes. The longer term drop in retail expenditures on fresh spinach products was almost matched by gains in expenditures on other leafy greens.

This paper presents a model of estimated demand for four tobacco products: cigarettes, cigars, chewing tobacco, and smoking tobacco products. Own elasticities and cross-price elasticities are used to obtain insights into the effectiveness and implications of new policy measures. Of particular interest is whether substitution of various tobacco products varies by market outlet. Several variations of the tobacco product outlet-choice model were estimated using iterative SUR. Four separate product-specific models where also estimated and represent consumers’ choice of a retail market outlet to purchase a particular tobacco product. In contrast to the joint product-outlet choice model, the two stage budgeting model rests on the assumption that consumers first choose a tobacco product, and then choose where to purchase it. In addition to estimating overall demand for the four tobacco products, models are estimated for tobacco products from three specific outlets: grocery stores, drug stores, and convenience stores. The paper investigates whether the various outlets substitute or complement each other and briefly deals with the issue of the premium consumers pay when purchasing tobacco products at convenience stores.

This paper generalizes the standard error correction model and applies this more general modeling procedure to an analysis of the spinach e-coli outbreak on consumer demand.

Derived demand relationships among four weight categories of feeder cattle entering Texas feedlots and feed were examined using a Generalized McFadden dual cost function specified as an error correction model. Relationships among own- and cross-price elasticities provide evidence for at least two cattle feeding enterprises, feeding lightweight feeder cattle (calves) and feeding heavier cattle. These results indicate systematic differences in demand relationships among the different weight classes, providing explanation and insight into mixed results from earlier studies. Seasonality differed across weight categories, providing additional support for multiple cattle feeding enterprises. A third step was added to the Engle-Granger two-step estimation procedure to incorporate information provided in the second step.