Method and system for accurately forecasting prices and other attributes of agricultural commodities

Abstract

Using a general-purpose computer, the method and system of the present invention enables the forecasting of agricultural commodity prices and amounts of consumption, production and trade flows across regions, under a variety of supply and demand, trade and domestic policy scenarios and over an at least annual time period. The method employs a multi-component spatial equilibrium function approximating an inter-regional market in agricultural commodities, such as dairy commodities, and enables the setting of trade and domestic policy instruments to enable forecasting under a variety of forecast scenarios. The function further enables the incorporation of intermediate commodities, in addition to primary and processed commodities, to account for the effects of reconstitution technologies on said forecasted values. The method generally comprises creating an inputs database comprising a definition of the regions and forecast scenarios, and a plurality of dairy sector data spanning a number of recent years including commodity prices and amounts of consumption, production and trade flow in the regions; refining the function; solving the refined function by maximizing a consumer and a producer surplus net of all transaction costs, to generate the forecasts; and, outputting the forecasts to a results database. The method may further solve for an optimal amount of intermediate commodities consumed in the making of the final processed commodities by region under an assumption of optimal use to further refine the forecasts. The system outputs in the forms of graphs, spreadsheets, maps, or other formats can be delivered electronically through various media.