When Someone Claims to Know Where Commodity Prices are Really Heading…Grab Your Wallet and Run!
Forecasting agricultural commodity prices is fraught with difficulties. These difficulties may be especially acute for milk prices, where volatility has been extreme in recent decades. This paper reviews the record of recent milk price projections from USDA, and also examines futures prices to project the subsequent year’s milk prices. Projections and forecasts do fine when little actually changes but seem to have no ability to capture substantial market shifts up or down.