U.S. Cotton Prices and the World Cotton Market: Forecasting and Structural Change
by Olga Isengildina-Massa and
Stephen MacDonald
Economic Research Report No. (ERR-80) 32 pp, September 2009
Cover Image for ERR80
This report analyzes recent structural changes in the world cotton industry and develops a statistical model that reflects current drivers of U.S. cotton prices. Legislative changes in 2008 authorized USDA to resume publishing cotton price forecasts for the first time in nearly 80 years. Systematic problems have become apparent in the forecasting models used by USDA and elsewhere, highlighting the need for an updated review of price relationships. A structural break in the U.S. cotton industry occurred in 1999, and world cotton supply has become an important determinant of U.S. cotton prices, along with China’s trade and production policy. The model developed here forecasts changes in the U.S. upland cotton farm price based on changes in U.S. cotton supply, the U.S. stocks-touse ratio (S/U), China’s net imports as a share of world consumption, the foreign supply of cotton, and selected farm policy parameters.
Keywords: Forecasting, cotton, price, demand, trade, structural change, farm programs
In this publication...
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Report summary, Pdf file 121 kb
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Abstract, Contents, and Summary, Pdf file 129 kb
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Introduction, Pdf file 35 kb
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Data, Pdf file 33 kb
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Cotton Price Model, Pdf file 86 kb
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Structural Change Test, Pdf file 58 kb
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Estimation Results, Pdf file 64 kb
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Conclusions and Implications, Pdf file 51 kb
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References, Pdf file 45 kb
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Entire report, Pdf file 666 kb
Charts and graphs (in .png format) from this report are available in the .zip file listed below. The .zip file also contains a document (readme.txt) that lists the name and title of each chart or graph file.
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