Using USDA Forecasts to Estimate the Price Flexibility of Demand for Agricultural Commodities

Using USDA Forecasts to Estimate the Price Flexibility of Demand for Agricultural Commodities

We estimate the general equilibrium price flexibility of demand for corn and soybeans using monthly changes in expected supply published by the USDA. Our estimates reflect the demand response to a one-year supply shock and thus correspond to the inverse demand elasticity. We derive the conditions un...

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Published in:American journal of agricultural economics 2012-07, Vol.94 (4), p.978-995
Main Authors: Adjemian, Michael K., Smith, Aaron
Format: Article
Language:eng
Subjects:
Agricultural and food market
Agricultural commodities
Agricultural economics
Agricultural pricing
Commodities
Commodity prices
Corn
Corn prices
Crop economics
Crops
Demand
demand flexibility
Economic forecasts
Elasticity of demand
Estimates
Estimation
Ethanol
futures prices
Market forecasts
Price elasticity
Price flexibility
Soybeans
Studies
Supply
Supply and demand
Supply shocks
US Department of Agriculture
USDA supply forecasts
WASDE
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recordid cdi_proquest_miscellaneous_1036883117
title Using USDA Forecasts to Estimate the Price Flexibility of Demand for Agricultural Commodities
format Article
creator Adjemian, Michael K.
Smith, Aaron
subjects Agricultural and food market
Agricultural commodities
Agricultural economics
Agricultural pricing
Commodities
Commodity prices
Corn
Corn prices
Crop economics
Crops
Demand
demand flexibility
Economic forecasts
Elasticity of demand
Estimates
Estimation
Ethanol
futures prices
Market forecasts
Price elasticity
Price flexibility
Soybeans
Studies
Supply
Supply and demand
Supply shocks
US Department of Agriculture
USDA supply forecasts
WASDE
ispartof American journal of agricultural economics, 2012-07, Vol.94 (4), p.978-995
description We estimate the general equilibrium price flexibility of demand for corn and soybeans using monthly changes in expected supply published by the USDA. Our estimates reflect the demand response to a one-year supply shock and thus correspond to the inverse demand elasticity. We derive the conditions under which our estimates are consistent, and we show how demand flexibility varies by season, inventory, time horizon, and demand composition. At average inventory and without accounting for corn-ethanol use, we obtain price flexibility estimates of—1.35 and—1.03 for corn and soybeans, respectively. Current corn-ethanol production levels are associated with much larger absolute flexibilities for both commodities.
language eng
source EBSCOhost Business Source Ultimate; International Bibliography of the Social Sciences (IBSS); JSTOR Archival Journals and Primary Sources Collection
identifier ISSN: 0002-9092
fulltext fulltext
issn 0002-9092
1467-8276
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container_title American journal of agricultural economics
container_volume 94
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