{
  "id": "RL33204",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL33204",
  "active": false,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 311212,
      "date": "2006-01-06",
      "retrieved": "2016-04-07T19:22:26.067029",
      "title": "Price Determination in Agricultural Commodity Markets: A Primer",
      "summary": "This report provides a general description of price determination in major U.S. agricultural\ncommodity markets for wheat, rice, corn, soybeans, and cotton. Understanding the fundamentals\nof commodity market price formation is critical to evaluating the potential effects of government\npolicies and programs (existing or proposed), as well as of trade agreements that may open U.S.\nborders to foreign competitors. In addition, an understanding of the interplay of market forces over\ntime contributes to flexibility in making policy for what may be short-term market phenomena. The\ngeneral price level of an agricultural commodity, whether at a major terminal, port, or commodity\nfutures exchange, is influenced by a variety of market forces that can alter the current or expected\nbalance between supply and demand. Many of these forces emanate from domestic food, feed, and\nindustrial-use markets and include consumer preferences and the changing needs of end users;\nfactors affecting the production processes (e.g., weather, input costs, pests, diseases, etc.); relative\nprices of crops that can substitute in either production or consumption; government policies; and\nfactors affecting storage and transportation. International market conditions are also important\ndepending on the \"openness\" of a country's domestic market to international competition, and the\ndegree to which a country engages in international trade.\n A distinguishing feature of U.S. commodity markets is the importance of futures markets. \nUnlike cash markets which deal with the immediate transfer of goods, a futures market is based on\nbuying (or selling) commodity contracts at a fixed price for potential physical delivery at some future\ndate. A futures exchange provides the facilities for buyers and sellers to trade commodity futures\ncontracts openly, and reports any market transactions to the public. As a result of this activity,\nfutures markets function as a central exchange for domestic and international market information and\nas a primary mechanism for price discovery, particularly for storable agricultural commodities with\nseasonal production patterns.\n The U.S. Department of Agriculture (USDA) plays a critical role in monitoring and\ndisseminating agricultural market information. Commodity markets rely heavily on USDA reports\nfor guidance on U.S. and international supply and demand conditions. The release of USDA supply\nand demand estimates has the potential to substantially alter market expectations about current and\nfuture commodity market conditions and are, therefore, closely watched by market participants. \n In general, certain characteristics of agricultural product markets set them apart from most\nnon-agricultural product markets and tend to make agricultural product prices more volatile than are\nthe prices of most nonfarm goods and services. Three such noteworthy characteristics of agricultural\ncrops include the seasonality of production, the derived nature of their demand, and generally\nprice-inelastic demand and supply functions. In addition, wheat, rice, corn, soybeans, and cotton\neach have certain unique structural characteristics that further differentiate the nature of market price\nformation from each other. This report will be updated as conditions warrant.",
      "type": "CRS Report",
      "typeId": "REPORTS",
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      "topics": []
    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc822027/",
      "id": "RL33204_2005Dec20",
      "date": "2005-12-20",
      "retrieved": "2016-03-19T13:57:26",
      "title": "Price Determination in Agricultural Commodity Markets: A Primer",
      "summary": null,
      "type": "CRS Report",
      "typeId": "REPORT",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Agricultural Policy",
    "Economic Policy"
  ]
}