1 / 33

ECON 337: Agricultural Marketing

This article explores the concept of seasonal patterns in agricultural marketing, discussing their link to supply and demand, storage costs, and livestock reproductive cycles. It also provides a step-by-step guide on how to calculate seasonal indices and use them for price forecasting. Additionally, the article covers various technical analysis tools, such as charting, moving averages, and the relative strength index, and evaluates their effectiveness in predicting market trends.

travisweaver
Download Presentation

ECON 337: Agricultural Marketing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. ECON 337: Agricultural Marketing Lee Schulz Associate Professor lschulz@iastate.edu 515-294-3356 Chad Hart Associate Professor chart@iastate.edu 515-294-9911

  2. Seasonal Patterns • A price pattern that repeats itself with some degree of accuracy year after year. • Supply and demand • Often sound reasons • Widely known • Linked to storage cost or basis patterns in grains • Linked to conception and gestation in livestock

  3. How to Calculate Seasonal Index Pick time period (number of years) Pick season period (month, quarter) Calculate average price for season Calculate average price over time Divide season average by over time average price x 100

  4. Iowa – S. Minnesota Live Cattle Prices Total All Grades, $/cwt

  5. Using Seasonal Index to Forecast Observe price in time t1 P1 Forecast price in time t2 P2 Start with P1/ I1 = P2 / I2 Then P1 x I2 / I1 = P2 Assume that cattle are selling at $123.15/cwt in January. What is the forecast of July? PJanx IJul/ IJan = PJul $123.15 x 0.981/ 1.001 = $120.69

  6. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  7. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  8. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  9. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  10. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  11. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  12. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  13. Estimated Returns to Finishing Yearling Steers, Iowa, 2008-2017, Monthly

  14. Dramatic Changes Have Taken Place

  15. Estimated Returns to Farrow to Finish, Iowa, 2008-2017, Monthly

  16. Seasonal Pricing Patterns Source: USDA, NASS, Monthly Price Data 1980-2016

  17. Corn Pricing Patterns Source: USDA, NASS, Monthly Price Data 1980-2016

  18. Soybean Pricing Patterns Source: USDA, NASS, Monthly Price Data 1980-2016

  19. Charting Channel lines

  20. Sell Signal A sell signal is one close below the charting lines Sell signal

  21. Buy Signal Some chartists need only one close above the charting line to create a buy signal, others use two closes above. Buy signal

  22. Resistance and Support Resistance level: A price level where the market seems to hit and bounce down Support level: A price level where the market seems to hit and bounce up

  23. Key Reversal A key reversal is when the daily high and low price range exceed the price range for the previous two days.

  24. Gaps Gaps often occur when a major new piece of information hits the market. They are often filled in by later price movements.

  25. Double Tops & Bottoms Double tops and bottoms show prices with major technical resistance. These can be several days apart.

  26. Head & Shoulders Source: Figure 7, Charting Commodity Futures Ag Decision Maker, File A2-20

  27. Moving Averages 9 day average 18 day average 40 day average Sell signal Buy signals

  28. Relative Strength Index • Looks at last X days worth of closing prices • X = 9, 14, 30, etc. • Summarizes upward and downward price movements during the period • Record the last 14 days worth of price changes, based on closing prices • Sum the positive and negative price changes and create average for each • Relative Strength Index = (Up average/(Up average + Down average))*100

  29. RSI for Nov. 2014 Soybeans

  30. Relative Strength Index RSI’s above 70 (80) are considered signals of a market due to decline RSI’s below 30 (20) are considered signals of a market due to rally

  31. Does Technical Analysis Work? Arguments for it: • Real world markets are not perfectly rational • Markets may be slow to respond to new information • Technical analysis works with the psychological biases • It works because so many people use it • Self-fulfilling Arguments against: • Efficient market hypothesis • The current price holds all of the relevant information

  32. Class web site: http://www2.econ.iastate.edu/faculty/hart/Classes/econ337/Spring2019/index.htm

More Related