WASDE price estimate accuracy

A new post by Brent Gloy, agricultural economist formerly at Purdue University, compares World Agricultural Supply Demand Estimate price projections to the average marketing year price (MYA) in a post entitled “How Accurate are WASDE Price Estimates”. As Brent mentions, WASDE will begin making price projections for the year’s crop beginning in May. Those price projections will have impact on the market and on farmer’s expectations of prices received. So a natural question is “How accurate have the price projections?” The post is located at: https://ageconomists.com/2019/04/22/how-accurate-are-wasde-price-estimates/.

Gloy provides a couple of figures showing the May WASDE mid-point price compared to the MYA price. Of course, there is variation. Both corn and soybean averaged within 5% of the May WASDE midpoint price for the past 20 years. But some years were off by as much as much as 30%+.

Take some time to read Brent’s post and think about the implications of price variation. What types of year were those that have high price variability and is this year one where price variability is likely?