Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Market Situation & Outlook Interpret market factors that impact prices and resulting marketing and management decisions » Supply » Demand Motivations Estimate elasticities for policy analysis Evaluate marketing decisions Efficient market hypothesis Enhance competition by providing timely and relevant information Interpret information Market Situation Define current and recent past Typically measuring change in key variables to estimate change in price Short term outlook Relatively inelastic supply » Sellers willing to sell at prices less than average total cost Relatively stable demand Prices adjust to clear supplies Intermediate term outlook Supply and demand become more elastic Buyers and sellers better able to react to prices Long term outlook Buyers and sellers fully adjust to prices Rely on elasticities and cost curves to estimate quantity changes Short run forecast Price » = f (own supply, supply of substitutes, supply of complements, income, population, exports, imports, marketing margins) Short term outlook Use price flexibilities » The percentage change in price for a 1% change in the quantity supplied » Fpi = % Pi / % Q i » Approximately 1/elasticity Own price flexibilities Assumes all else equal Always negative Typically about -2.0 for most ag commodities Cross price flexibilities The percentage change in the price of good i resulting from a 1% change in the quantity supplied of good j » Fpij = % Pi / % Qj Compare to another period Typically compare to same time period one year earlier Captures seasonal demand and marketing margin factors Using Flexibilities Change in price of beef= % beef supply + % pork supply + % poultry supply + % income + % population ____x ____x ____x ____x ____x -2.0 = ___ -0.3 = ___ -0.3 = ___ +0.2 = ___ +1.0 =___ Now forecast supplies Inventory reports » Cattle on feed » Hogs and Pigs » Hatchery numbers Demand relatively stable Other impacts Imports & exports » Put in perspective Marketing margins Seasonal patterns Cyclical patterns Seasonal patterns A price pattern that repeats itself with some degree of accuracy year after year. » Supplies and demand » Often sound reasons » Widely known Io w a S. Min n eso ta B arro w an d G ilt Seaso n al Price In d ex 1.15 1.10 1.05 1.01 1.00 0.95 1.08 1.09 1.10 1.06 0.98 0.97 0.94 0.98 0.97 0.93 0.90 0.90 . ec D N ov . . ct O t. S ep . ug A ly Ju ne Ju ay M A pr . . ar M . eb F Ja n . 0.85 Cyclical Pattern A production and price pattern that repeats itself over longer than a year. Production tied to profits Biological lag Hogs and Cattle Grain Balance Sheet Incorporate supply and demand into one number Relate S/U to price levels » Supply to Use ratio » “Carryover” Grain Supply and Use Total supply » Beginning stocks + production + imports Total utilization » Exports + processing + seed + food + feed and residual + carry over Supply / Use “Supply” = » Ending stocks or carryover “Use” = » All but carryover » Demand during the year Supply / Use Ratio S/U » Measure marginal supply relative to demand » The smaller the ratio the tighter the supply and the higher the price » Non-linear relationship Grain Forecast Forecast » Production = f(acres, yield, imports) » Use = f(feed demand, exports, processing) »S/U Government reports Planting intentions Crop progress and estimates Stocks Exports Trends and Patterns Trend line yields Seasonal price patterns » Typically linked to storage cost » Basis relationships