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Using USDA Production Forecasts: Adjusting for Smoothing

Author

Listed:
  • Sanders, Dwight
  • Altman, Ira J.
  • Manfredo, Mark R.
  • Anderson, Rachel

Abstract

Agribusinesses, producers and farm managers rely heavily on forecasts made by the U.S. Department of Agriculture and other government agencies in forming expectations that drive management decisions. While agency forecasts are a valuable and low cost source of forecast information, it is commonly thought that these agencies may unintentionally make gradual adjustments to their forecasts. In other words, agency forecasts may be “smoothed” such that they slowly evolve toward a rational forecast. In this paper, we investigate forecast smoothing in the USDA’s cotton production forecasts and demonstrate how forecasting practitioners and farm managers should correct the forecasts.

Suggested Citation

  • Sanders, Dwight & Altman, Ira J. & Manfredo, Mark R. & Anderson, Rachel, 2009. "Using USDA Production Forecasts: Adjusting for Smoothing," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2009, pages 1-9.
    • Handle: RePEc:ags:jasfmr:189856
    DOI: 10.22004/ag.econ.189856
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    References listed on IDEAS

    as
    1. Good, Darrel L. & Irwin, Scott H., 2005. "Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2004," AgMAS Project Research Reports 14785, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    2. Good, Darrel L. & Irwin, Scott H., 2006. "Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2005," AgMAS Project Research Reports 37514, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    3. Houston, Jack E. & McIntosh, Christopher S. & Stavriotis, Paul A. & Turner, Steve C., 1999. "Leading Indicators of Regional Cotton Acreage Response: Structural and Time Series Modeling Results," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(3), pages 507-517, December.
    4. T. Randall Fortenbery & Daniel A. Sumner, 1993. "The effects of USDA reports in futures and options markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 13(2), pages 157-173, April.
    5. 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.
    6. G. Gunnelson & W. D. Dobson & S. Pamperin, 1972. "Analysis of the Accuracy of USDA Crop Forecasts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(4_Part_1), pages 639-645.
    7. Daniel A. Summer & Rolf A. E. Mueller, 1989. "Are Harvest Forecasts News? USDA Announcements and Futures Market Reactions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 1-8.
    Full references (including those not matched with items on IDEAS)

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