Forecasting a moving target: The roles of quality and timing for determining northern U.S. Wheat basis

Citation: Bekkerman, A., Brester, G. W., & Taylor, M. (2016). Forecasting a moving target: The roles of quality and timing for determining northern U.S. Wheat basis. Journal of Agricultural and Resource Economics, 41(1), 25-41. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-84955444036&partnerID=40&md5=5269e2afe2c206ad381f66e84019281dWhile nearly instantaneous commodity futures price information provides price forecasts for national markets, many market participants are interested in forecasts of local cash prices. Expected basis estimates are often used to convert futures prices into local price forecasts. This study considers basis patterns in the northern U.S. hard red spring and hard red winter wheat markets. Using data on basis values across 215 grain-handling facilities, we empirically test the forecasting capabilities of numerous basis models. Contrary to basis models developed for other U.S. regions, we show that recent futures prices, protein content, and harvest information are more important for accurate basis forecasts than historical basis averages. The preferred basis models are used to develop an automated web-based basis forecasting tool, available at http://wheatbasis.Montana.edu. Copyright 2016 Western Agricultural Economics Association

The Significance and Insignificance of Demand Analysis in Evaluating Promotion Programs

The estimated effects of promotion on demand are often small and insignificant. Yet, the estimated effects of promotion on industry profit are often positive and large. This puzzle is explained by demonstrating that (in)significance of promotion in a demand equation does not imply, and is not implied by, (in)significance of promotion in an industry profit equation. A Monte Carlo example is provided. The econometric modeling implications are discussed. The short-run marginal effect of a dollar of generic beef promotion on slaughter cattle industry profit is estimated to be about $9.84 with a standard error of 3.77 for 1997. Copyright 2005, Oxford University Press.

Testing the Integration of U.S.-Canadian Meat and Livestock Markets

"Price transmission is a critically important issue that affects market enlargement and the unification of Canadian-U.S. agriculture. This study adopts alternative frameworks to examine the nature of cross-border integration in selected meat and livestock markets. The aim is to determine the extent to which selected meat and livestock markets transmit price signals across the international border using time-series data through 2001. Typically, price-based studies examining market integration across countries ignore important spatial and temporal factors affecting commodity price relationships such as adjustments lags, changes in the value of national currencies, and policy-induced trade barriers. Here, we account for such factors in our two model specifications. The first model is based upon the law-of-one price (LOP) framework and focuses on spatial efficiency. The second analytical framework is the vector autoregressive (VAR) model that highlights the dynamic notion of market connectedness. The LOP analysis permits us to formally test the existence of perfect market integration and complete market segmentation. The VAR analysis enables us to gauge price-shock transference. Empirical evidence is generated confirming that the two national markets for whole chicken are segmented, a not unsurprising finding given that poultry is a supply managed sector in Canada. The Canadian-U.S. hog- and pork-product markets were found to be more integrated than the Canadian-U.S. steer- and beef-product markets. Evidence is also provided showing that the Canadian-U.S. exchange rate inhibits cross-border integration in these commodity markets." Copyright 2006 Canadian Agricultural Economics Society.