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An Analysis of Past World Market Prices of Feed and Milk and Predictions for the Future

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  • Bjørn Gunnar Hansen
  • Yushu Li

Abstract

ABSTRACT Understanding of price behavior is a critical element to make decisions in uncertain conditions that significantly influence the return of dairy market participants. Increased variability in both the world milk price and the world feed price during the last 7‐8 years has increased the need for research on price dynamics and price forecasting. The aims of this paper are to explore the dynamics embedded in and between the world milk and feed prices, and to produce reliable forecasts for both prices. We collected the world milk price and the world feed price series from 2002 to 2015 from the International Farm Comparison Network (IFCN). The analysis revealed that the two price series contain business cycles of approximately 32 months. Further, the two series are co‐ integrated, with the feed price as the leading variable. A combination of three different forecasting models can provide reasonably good forecasts of both prices.

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  • Bjørn Gunnar Hansen & Yushu Li, 2017. "An Analysis of Past World Market Prices of Feed and Milk and Predictions for the Future," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 175-193, April.
    • Handle: RePEc:wly:agribz:v:33:y:2017:i:2:p:175-193
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    File URL: http://hdl.handle.net/10.1002/agr.21474
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