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Insights from Anticipatory Prices

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  • Leslie J. Verteramo Chiu
  • William G. Tomek

Abstract

Contemporaneous observations on expected supply and on prices of post†harvest futures contracts for corn are used to estimate expected demand relationships. These equations are used to estimate the prices of the post†harvest contracts based on new supply estimates. Each estimate can be compared with a corresponding futures price, i.e. the market forecast. The differences help discern the market expectations about the expected demand for the new crop relative to historical experience, which can help support outlook analyses. We find that in recent years, a 100 million bushel change in the expected supply of corn results in about a 6 cent per bushel negative change in the price of December corn. The discussion also deepens understanding of the term ‘anticipatory prices’ as defined by Holbrook Working in his 1958 work.

Suggested Citation

  • Leslie J. Verteramo Chiu & William G. Tomek, 2018. "Insights from Anticipatory Prices," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 351-364, June.
    • Handle: RePEc:bla:jageco:v:69:y:2018:i:2:p:351-364
    DOI: 10.1111/1477-9552.12251
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    Cited by:

    1. Yan Guo & Dezhao Tang & Wei Tang & Senqi Yang & Qichao Tang & Yang Feng & Fang Zhang, 2022. "Agricultural Price Prediction Based on Combined Forecasting Model under Spatial-Temporal Influencing Factors," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
    2. Eugenio S.A. Bobenrieth & Juan R.A. Bobenrieth & Ernesto A. Guerra & Brian D. Wright & Di Zeng, 2021. "Putting the Empirical Commodity Storage Model Back on Track: Crucial Implications of a “Negligible” Trend," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 1034-1057, May.
    3. Nathan P. Hendricks, 2022. "Would farmers benefit from removing more land from production in the next farm bill?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1139-1157, September.

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