lectur8-page39

lectur8-page39 - accurately predict. Where would a producer...

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Another example: Assume: E(soybean yield) = 30 bu./ac. E(corn yield) = 70 bu./ac. E(price soybeans) = $6.00/bu. E(price corn) = $2.00/bu. The notation above is new. E(soybean yield) means expected soybean yield. E(price soybeans) means expected price of soybeans. Where would a producer get an estimate of expected yields? From production records that he/she better be keeping. Agricultural prices are volatile and difficult, if not impossible, to
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Unformatted text preview: accurately predict. Where would a producer get an expected price in the future from? One of the best sources is the futures market at the Chicago Board of Trade or the Chicago Mercantile Exchange. These prices are the markets best guess as to what the price of a commodity will be months into the future....
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