System for Accurately Forecasting Prices and Other Attributes of Agricultural Commodities
Inventors: Thomas Cox, Jean-Paul Chavas, Yong Zhu
The Wisconsin Alumni Research Foundation (WARF) is seeking commercial partners interested in developing a method and system for forecasting agricultural commodity prices and levels of consumption, production and trade flows across regions.
Industries using, producing, or trading in agricultural commodities require accurate forecast information to aid their management and procurement decisions.
UW-Madison researchers have developed a method and system for forecasting agricultural commodity prices and amounts of consumption, production and trade flows across regions, under a variety of scenarios. The method involves use of a general-purpose computer and employs a multi-component spatial equilibrium function that approximates an inter-regional market in agricultural commodities. The method generally involves first creating an inputs database that contains definitions of the regions and forecast scenarios. The inputs database also contains several years of industry data, including commodity prices and amounts of consumption, production, and trade flow in the regions. The function is refined and solved by maximizing a consumer and producer surplus net of all transaction costs to generate the forecasts. To further refine the forecasts, the method may be solved for an optimal amount of intermediate commodities consumed in the making of the final processed commodities.
- Provides accurate agricultural commodity forecast information
- Provides information that allows industries at any level of commodity production, use or trade to manage for minimal costs and maximal profits
- Accurately approximates a multi-regional market in agricultural commodities by accounting for inter-regional variations
- Allows incorporation of intermediate commodities, in addition to primary and processed commodities, to account for effects of reconstitution technologies on forecasted values
- Enables the setting of trade and domestic policy instruments to allow forecasting under a variety of scenarios
- Accounts for costs of transporting and marketing primary, intermediate and processed commodities
- Delivers electronic system outputs in the forms of graphs, spreadsheets, maps or other formats