Simplified Short-Run Price Forecasting Models for Wheat and Corn

Abstract

Models were developed which are simple enough for use by farmers and rural elevators in short-term price forecasting. The models express annual U.S. wheat and corn prices as a function of world stocks and projected levels of world production and consumption. The wheat model had a 6.6% average error in annul prices over the 12 years of data and the corn model averaged 1.2% error over 11 years of data. The models predicted 1986/87 prices to increase 6% for wheat and decrease 20% for corn using U.S.D.A. projections of production and consumption as of August, 1986. Price responsiveness indicators were also examined.