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AGRICULTURAL PRICES

AGRICULTURAL PRICES. WHAT DO PRICES MEAN? SOYBEANS = $14.50. WHAT DO PRICES MEAN? PRICE OF NOVEMBER 2008 SOYBEANS = $14.50/BU. WHAT DO PRICES MEAN? PRICE OF NOVEMBER 2008 SOYBEANS = $14.50/BU Just part of the story. Price of competing crops (corn). Price of inputs (seed, fert).

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AGRICULTURAL PRICES

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  1. AGRICULTURAL PRICES

  2. WHAT DO PRICES MEAN?SOYBEANS = $14.50

  3. WHAT DO PRICES MEAN?PRICE OF NOVEMBER 2008 SOYBEANS = $14.50/BU

  4. WHAT DO PRICES MEAN?PRICE OF NOVEMBER 2008 SOYBEANS = $14.50/BUJust part of the story.Price of competing crops (corn).Price of inputs (seed, fert).

  5. AGRICULTURAL PRICES • ECONOMICALLY IMPORTANT • POLITICALLY IMPORTANT

  6. INFLUENCE FARM INCOME

  7. WELFARE OF CONSUMERS CME Milk

  8. AMOUNT OF EXPORT EARNINGS

  9. HOW ARE AGRICULTURAL PRICES DISCOVERED?

  10. HOW ARE AGRICULTURAL PRICES DISCOVERED?THE ENTIRE SPECTRUM: COMPLETE GOVERNMENT REGULATION TO NEARLY PERFECT COMPETITION

  11. Milk:Federal Marketing Orders

  12. Corn: Somewhat More Competitive MarketHogs: Even Less Government Involvement

  13. Characteristics of Farm PricesThey tend to be more volatile than prices in other sectors of the economy.

  14. They tend to be more volatile than prices in other sectors of the economy.

  15. Time LagA considerable time lag often exists between when a producer makes a decision and when the output is ready for the market.

  16. Production Lags Due to Biological Lags Months Swine Slaughter 30 5-6 Months Pig Born 3.75 months Gilt Bred 20 Slaughter 7-8 months 5-6 months Pig Born Pig Born 3.75 months 10 Gilt Bred 7-8 months 0 Pig Born

  17. Production Lags Due to Biological Lags Cattle Months 50 Calf Born 9 Months Slaughter 40 Heifer Bred 17 – 19 Months 30 Calf Born Calf Born 9 Months 20 Heifer Bred 14 –18 Months 10 0 Calf Born

  18. SUPPLYThe actual production of agricultural products can be effected by many variables.Weather DiseaseInsects

  19. MARKET STRUCTUREAt the farm level – prices are discovered in a rather competitive market.

  20. Large number of producersGeographically dispersed

  21. The Role of PricesInformationProvide information to producersfrom consumers.

  22. $6.72/3.24

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