The value of weather forecasts to the marketing of durum wheat

Abstract

The purpose of this study is to determine if post harvest durum prices are related to spring and summer weather conditions in the Canadian prairie provinces and North Dakota. The value of long range weather forecasts were evaluated in terms of more accurately forecasting prices as well as determining a strategy that the Canadian heat Board could utilize in terms of forward contracting different quantities of durum during the growing season. It was found that in late May and early June changes in durum supplies had an effect on post harvest prices of durum. However the addition of the durum supply information in the summer months did not significantly reduce the forecast error of durum prices after harvest. During the summer months an average price change has a greater effect on post harvest prices of durum than an average change in yearly durum supply. Presumably other factors such as export demand and government programs are more important to durum prices during the fall than the supply of North American durum. From the decision analysis models it was found that forward contracting durum during the spring and summer improved the marketing of durum on average. The weather information that allowed the decision model some flexibility with respect to the quantities forward contract added more value again to the marketing of durum. Therefore weather information adds more value to the marketing of durum wheat through the determination of an appropriate marketing strategy rather than through its importance in forecasting durum prices in the fall. (Abstract shortened by UMI.)