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Research Reports: All Reports

Report 2012-02:  Advisory Service Marketing Profiles for cattle over 1995-2004

Date  Authors  HTML Format  PDF  
06/20/2012 Tracy L. Brandenberger, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for 1995 through 2004 cattle.


Report 2012-01:  Advisory Service Marketing Profiles for Hogs over 1995-2004

Date  Authors  HTML Format  PDF  
06/20/2012 Ricky L. Webber, Ryan M. Batts, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for 1995 through 2004 hogs.


Report 2009-03:  Advisory Service Marketing Profiles for Hard Red Winter Wheat over 1995-2004

Date  Authors  HTML Format  PDF  
12/04/2009 Ryan M. Batts, Tracy L. Brandenberger, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 1995 through 2004 hard red winter wheat crops.


Report 2009-02:  Advisory Service Marketing Profiles for Soft Red Winter Wheat over 1995-2004

Date  Authors  HTML Format  PDF  
12/04/2009 Ryan M. Batts, Tracy L. Brandenberger, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 1995 through 2004 soft red winter wheat crops.


Report 2009-01:  The Pricing Performance of Market Advisory Services in Wheat Over 1995-2004

Date  Authors  HTML Format  PDF  
12/04/2009 Ryan M. Batts, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to evaluate the pricing performance of market advisory services for the 1995-2004 wheat crops.


Report 2006-05:  Advisory Service Marketing Profiles for Soybeans over 2002-2004

Date  Authors  HTML Format  PDF  
06/26/2006 Evelyn V. Colino, Silvina M. Cabrini, Nicole M. Aulerich, Tracy L. Brandenberger, Robert P. Merrin, Wei Shi, Scott H. Irwin, Darrel L. Good, and Joao Martines Filho Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 2002, 2003 and 2004 soybean crops.


Report 2006-04:  Advisory Service Marketing Profiles for Corn over 2002-2004

Date  Authors  HTML Format  PDF  
06/26/2006 Evelyn V. Colino, Silvina M. Cabrini, Nicole M. Aulerich, Tracy L. Brandenberger, Robert P. Merrin, Wei Shi, Scott H. Irwin, Darrel L. Good, and Joao Martines Filho Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 2002, 2003 and 2004 corn crops.


Report 2006-03:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2004: A Non Technical Summary

Date  Authors  HTML Format  PDF  
04/14/2006 Scott H. Irwin, Darrel L. Good, Joao Martines Filho, and Ryan M. Batts Click Here 156K
Abstract 

The purpose of this research report is to summarize the pricing performance of professional market advisory services for the 1995-2004 corn and soybean crops.


Report 2006-02:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2004

Date  Authors  HTML Format  PDF  
04/14/2006 Scott H. Irwin, Darrel L. Good, Joao Martines Filho, and Ryan M. Batts Click Here 156K
Abstract 

The purpose of this research report is to evaluate the pricing performance of market advisory services for the 1995 2004 corn and soybean crops.


Report 2006-01:  Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2005

Date  Authors  HTML Format  PDF  
02/24/2006 Darrel L. Good and Scott H. Irwin Click Here 156K
Abstract 

There appears to be continuing misunderstanding of US Department of Agriculture (USDA) motives, methods and procedures used to arrive at production forecasts for US corn and soybean crops.


Report 2005-04:  The Profitability of Technical Trading Rules in US Futures Markets: A Data Snooping Free Test

Date  Authors  HTML Format  PDF  
05/10/05 Cheol-Ho Park and Scott H. Irwin Click Here 156K
Abstract 

To determine whether technical trading rules have been profitable in US futures markets, this study confirms and replicates a well-known 1988 study by Lukac, Brorsen, and Irwin. Results indicate that substantial technical trading profits during the 1978-1984 period are no longer available in the 1985-2003 period.


Report 2005-03:  Understanding USDA Corn and Soybean Production Forecasts: Methods, Performance and Market Impacts over 1970 - 2004

Date  Authors  HTML Format  PDF  
04/28/2005 Darrel L. Good and Scott H. Irwin Click Here 156K
Abstract 

The analysis presented in this report suggests that over the long-run the USDA performs reasonably well in generating crop production forecasts for corn and soybeans. There is strong evidence that market participants view USDA corn and soybean production forecasts as important new information. The forecasting performance of the USDA in 2004 relative to the private market was quite strong in corn and, at best, mixed in soybeans.


Report 2005-02:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2003: A Non-Technical Summary Date Authors

Date  Authors  HTML Format  PDF  
03/29/2005 Scott H. Irwin, Darrel L. Good, Joao Martines-Filho and Lewis A. Hagedorn Click Here 156K
Abstract 

This report provides a non-technical summary of AgMAS Report 2005-01.


Report 2005-01:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2003

Date  Authors  HTML Format  PDF  
03/29/2005 Scott H. Irwin, Darrel L. Good, Joao Martines-Filho and Lewis A. Hagedorn Click Here 156K
Abstract 

Test results provide little evidence that advisory programs as a group outperform market benchmarks for the 1995-2003 corn and soybean crops, particularly after considering risk. The evidence is somewhat more positive with respect to the farmer benchmark, even after taking risk into account. Test results also suggest that it is difficult to usefully predict the year-to-year pricing performance of advisory programs based on past pricing performance.


Report 2004-04:  The Profitability of Technical Analysis: A Review

Date  Authors  HTML Format  PDF  
10/12/2004 Cheol-Ho Park and Scott H. Irwin Click Here 156K
Abstract 

The purpose of this report is to review the evidence on the profitability of technical analysis. To achieve this purpose, the report comprehensively reviews survey, theoretical and empirical studies regarding technical trading strategies. We begin by overviewing survey studies that have directly investigated market participants' experience and views on technical analysis. The survey literature indicates that technical analysis has been widely used by market participants in futures markets and foreign exchange markets, and that about 30% to 40% of practitioners appear to believe that technical analysis is an important factor in determining price movement at shorter time horizons up to 6 months. Then we provide an overview of theoretical models that include implications about the profitability of technical analysis. Conventional efficient market theories, such as the martingale model and random walk models, rule out the possibility of technical trading profits in speculative markets, while relatively recent models such as noisy rational expectation models or behavioral models suggest that technical trading strategies may be profitable due to noise in the market or investors' irrational behavior. Finally, empirical studies are surveyed. In this report, the empirical literature is categorized into two groups, "early" and "modern" studies, according to the characteristics of testing procedures.

Early studies indicated that technical trading strategies were profitable in foreign exchange markets and futures markets, but not in stock markets before the 1980s. Modern studies indicated that technical trading strategies consistently generated economic profits in a variety of speculative markets at least until the early 1990s. Among a total of 92 modern studies, 58 studies found positive results regarding technical trading strategies, while 24 studies obtained negative results. Ten studies indicated mixed results. Despite the positive evidence on the profitability of technical trading strategies, it appears that most empirical studies are subject to various problems in their testing procedures, e.g., data snooping, ex post selection of trading rules or search technologies, and difficulties in estimation of risk and transaction costs. Future research must address these deficiencies in testing in order to provide conclusive evidence on the profitability of technical trading strategies.


Report 2004-03:  Crop Farmers' Use of Market Advisory Services

Date  Authors  HTML Format  PDF  
05/25/2004(Updated 07/19/2004) Olga Isengildina, Joost M.E. Pennings, Scott H. Irwin and Darrel L. Good Click Here 156K
Abstract 

This study sought to examine the nature of farmers' use of market advisory services based on the results of a survey of US crop producers. The survey revealed that market advisory service users tend to be significantly more risk seeking than non-users. Survey results indicated a large range in patterns of use of advisory services. Most farmers use advisory services to the greatest extent for marketing information, market analysis, and to keep up with markets. General guidelines (market strategies and price information) are utilized more than specific advice (e.g., specific pricing decisions, price forecasts). Only 11% of farmers reported that they closely follow the marketing recommendations provided by advisory services. Nonetheless, farmers report that the information provided by advisory services has a substantial impact on their marketing decisions. The implications of these results for advisory services, farmers, extension programs and research are discussed.


Report 2004-02:  Advisory Service Marketing Profiles for Soybeans in 2001

Date  Authors  HTML Format  PDF  
04/23/2004 Evelyn V. Colino, Silvina M. Cabrini, Scott H. Irwin, Darrel L. Good, and Joao Martines-Filho Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 2001 soybean crop. Marketing profiles are constructed by plotting the cumulative net amount priced under each program's set of recommendations throughout the crop year. Loan deficiency payment/marketing loan gain (LDP/MLG) profiles are constructed by plotting the cumulative percentage of the crop on which the LDP/MLG was claimed during the crop year.

Marketing profiles provide information to evaluate the style of advisory services in several ways. The percentage of crop priced is a measure of within-crop year price risk. The higher the proportion of a crop priced, the lower the sensitivity of the farmer's position value to crop price changes. For example, when 100% of the crop is priced there is no price sensitivity, which means that changes in price do not affect the value of the farmer's position. On the other hand, when the amount priced is 0%, the value of the farmer's position will vary in the same proportion as the change in price. Marketing profiles, therefore, allow investigating the evolution of price sensitivity under each service's set of recommendations along the marketing window.

Marketing profiles also provide other useful information. The number of steps in the profile lines and the location of these steps in the marketing window provide information about timing, frequency and size of recommended transactions. It is also possible to determine from the marketing profile figures how intensely a program uses options markets, since when options positions are open the profile line is irregular. In the same way, LDP/MLG profiles provide information about the size and timing of LDP/MLG claims.


Report 2004-01:  Advisory Service Marketing Profiles for Corn in 2001

Date  Authors  HTML Format  PDF  
04/23/2004 Evelyn V. Colino, Silvina M. Cabrini, Scott H. Irwin, Darrel L. Good, and Joao Martines-Filho Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 2001 corn crop. Marketing profiles are constructed by plotting the cumulative net amount priced under each program's set of recommendations throughout the crop year. Loan deficiency payment/marketing loan gain (LDP/MLG) profiles are constructed by plotting the cumulative percentage of the crop on which the LDP/MLG was claimed during the crop year.

Marketing profiles provide information to evaluate the style of advisory services in several ways. The percentage of crop priced is a measure of within-crop year price risk. The higher the proportion of a crop priced, the lower the sensitivity of the farmer's position value to crop price changes. For example, when 100% of the crop is priced there is no price sensitivity, which means that changes in price do not affect the value of the farmer's position. On the other hand, when the amount priced is 0%, the value of the farmer's position will vary in the same proportion as the change in price. Marketing profiles, therefore, allow investigating the evolution of price sensitivity under each service's set of recommendations along the marketing window.


Report 2003-07:  Understanding USDA Corn and Soybean Production Forecasts: An Overview of Methods, Performance and Market Impacts

Date  Authors  HTML Format  PDF  
10/23/2003 Darrel L. Good and Scott H. Irwin Click Here 156K
Abstract 

The purpose of this report is to improve understanding of USDA crop forecasting methods, performance and market impact. A review of USDA’s forecasting procedures and methodology confirms the objectivity and consistency of the forecasting process over time. No changes in methodology occurred in 2003. Month-to-month changes in corn and soybean production forecasts from 1970 through 2002 indicate little difference in magnitude and direction of monthly changes over time. USDA production forecast errors are largest in August and smaller in subsequent forecasts. There appears to be no trend in the size or direction of forecast errors over time. On average, USDA corn production forecasts are more accurate than private sector forecasts over 1970-2002, with the exception of August forecasts since the mid-1980s. In contrast, private sector soybean production forecasts generally are more accurate than USDA forecasts in August and September. USDA corn production forecasts have the largest impact on corn futures prices in August and recent price reactions have been somewhat larger than historical reactions. For soybeans, the largest reactions in futures prices occur in August and September, but recent reactions have been large in October. Overall, the analysis suggests the USDA performs reasonably well in generating crop production forecasts for corn and soybeans.


Report 2003-06:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2001: A Non-Technical Summary

Date  Authors  HTML Format  PDF  
07/02/2003 Scott H. Irwin, Joao Martines-Filho and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to summarize the pricing performance of professional market advisory services for the 1995-2001 corn and soybean crops. First, advisory programs in corn do not consistently beat market benchmarks, but they do consistently beat the farmer benchmark. Second, advisory programs in soybeans tend to beat both market and farmer benchmarks. Third, in terms of 50/50 revenue, advisory programs only marginally beat market benchmarks, but consistently beat the farmer benchmark. So, the results provide mixed performance evidence with respect to market benchmarks and consistently positive evidence with respect to the farmer benchmark. Caution should be used when considering the results, due to the relatively small sample of crop years available for analysis. In particular, the presence of sharp downward price trends in most crop years makes it difficult to determine whether the 1995-2001 sample period provides a reliable guide to future differences in pricing performance.


Report 2003-05:  The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2001

Date  Authors  HTML Format  PDF  
07/02/2003 Scott H. Irwin, Joao Martines-Filho and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to evaluate the pricing performance of market advisory services for the 1995-2001 corn and soybean crops. The results for 1995-2000 were released in earlier AgMAS research reports, while results for the 2001 crop year are new.

Certain explicit assumptions are made to produce a consistent and comparable set of results across the different advisory programs. These assumptions are intended to accurately depict “real-world” marketing conditions facing a representative central Illinois corn and soybean farmer. Several key assumptions are: i) with a few exceptions, the marketing window for a crop year runs from September before harvest through August after harvest, ii) on-farm or commercial physical storage costs, as well as interest opportunity costs, are charged to post-harvest sales, iii) brokerage costs are subtracted for all futures and options transactions and iv) Commodity Credit Corporation (CCC) marketing loan recommendations made by advisory programs are followed wherever feasible. Based on these and other assumptions, the net price received by a subscriber to market advisory programs is calculated for the 1995-2001 corn and soybean crops.

Market and farmer benchmarks are developed for the performance evaluations. Two market benchmarks are specified in order to test the fragility of performance results to changing benchmark assumptions. The 24-month market benchmark averages market prices for the entire 24-month marketing window. The 20-month market benchmark is computed in a similar fashion, except the first four months of the marketing window are omitted. The farmer benchmark is based upon the USDA average price received series for corn and soybeans in Illinois. The same assumptions applied to advisory program track records are used when computing the market and farmer benchmarks.

Four basic indicators of performance are applied to advisory program prices and revenues over 1995-2001. The results provide limited evidence that advisory programs as a group outperform market benchmarks, particularly after considering risk. In contrast, more evidence exists that advisory programs as a group outperform the farmer benchmark, even after taking risk into account. Little evidence is found that advisory programs with superior performance can be usefully selected based on past performance.

The results raise the intriguing possibility that even though advisory services do not appear to “beat the market,” they nonetheless provide an opportunity for farmers to improve marketing performance because farmers under-perform the market. Mirroring debates about stock investing, the relevant issue is whether farmers can most effectively improve marketing performance by pursuing “active” strategies, like those recommended by advisory services, or “passive” strategies, which involve routinely spreading sales across the marketing window.


Report 2003-04:  Advisory Service Marketing Profiles for Soybeans Over 1995-2000

Date  Authors  HTML Format  PDF  
06/30/2003 Joao Martines-Filho, Scott H. Irwin, Darrel L. Good, Silvina M. Cabrini, Brian G. Stark, Wei Shi, Ricky L. Webber, Lewis A. Hagedorn, and Steven L. Williams Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 1995 through 2000 soybean crops. Marketing profiles are constructed by plotting the cumulative net amount priced under each program’s set of recommendations throughout a crop year. Loan deficiency payment/marketing loan gain (LDP/MLG) profiles are constructed by plotting the cumulative percentage of the crop on which the LDP/MLG was claimed during the crop year.

Marketing profiles provide information to evaluate the style of advisory services in several ways. The percentage of crop priced is a measure of within-crop year price risk. The higher the proportion of a crop priced, the lower the sensitivity of the farmer’s position value to crop price changes. For example, when 100% of the crop is priced there is no price sensitivity, which means that changes in price do not affect the value of the farmer’s position. On the other hand, when the amount priced is 0%, the value of the farmer’s position will vary in the same proportion as the change in price. Marketing profiles, therefore, allow investigating the evolution of price sensitivity under each service’s set of recommendations along the marketing window.

Marketing profiles also provide other useful information. The number of steps in the profile lines and the location of these steps in the marketing window provide information about timing, frequency and size of recommended transactions. It is also possible to determine from the marketing profile figures how intensely a program uses options markets, since when options positions are open the profile line is irregular. In the same way, LDP/MLG profiles provide information about the size and timing of LDP/MLG claims.


Report 2003-03:  Advisory Service Marketing Profiles for Corn Over 1995-2000

Date  Authors  HTML Format  PDF  
06/26/2003 Joao Martines-Filho, Scott H. Irwin, Darrel L. Good, Silvina M. Cabrini, Brian G. Stark, Wei Shi, Ricky L. Webber, Lewis A. Hagedorn, and Steven L. Williams Click Here 156K
Abstract 

This report presents marketing profiles and loan deficiency payment/marketing loan gain profiles for the advisory services followed by the AgMAS Project for the 1995 through 2000 corn crops. Marketing profiles are constructed by plotting the cumulative net amount priced under each program’s set of recommendations throughout a crop year. Loan deficiency payment/marketing loan gain (LDP/MLG) profiles are constructed by plotting the cumulative percentage of the crop on which the LDP/MLG was claimed during the crop year.

Marketing profiles provide information to evaluate the style of advisory services in several ways. The percentage of crop priced is a measure of within-crop year price risk. The higher the proportion of a crop priced, the lower the sensitivity of the farmer’s position value to crop price changes. For example, when 100% of the crop is priced there is no price sensitivity, which means that changes in price do not affect the value of the farmer’s position. On the other hand, when the amount priced is 0%, the value of the farmer’s position will vary in the same proportion as the change in price. Marketing profiles, therefore, allow investigating the evolution of price sensitivity under each service’s set of recommendations along the marketing window.

Marketing profiles also provide other useful information. The number of steps in the profile lines and the location of these steps in the marketing window provide information about timing, frequency and size of recommended transactions. It is also possible to determine from the marketing profile figures how intensely a program uses options markets, since when options positions are open the profile line is irregular. In the same way, LDP/MLG profiles provide information about the size and timing of LDP/MLG claims.


Report 2003-02:  Portfolios of Agricultural Market Advisory Services: How Much Diversification is Enough?

Date  Authors  HTML Format  PDF  
04/04/2003 Brian G. Stark, Silvina M. Cabrini, Scott H. Irwin, Darrel L. Good and Joao Martines-Filho Click Here 156K
Abstract 

Agricultural market advisory services offer specific advice to farmers on how to market their commodities. Farmers can subscribe to one or more of these services and follow their advice as a way of managing price risk. According to portfolio theory, a combination of these services may have risk/return benefits compared to individual services. This report analyzes the potential risk reduction gains from naïve diversification among market advisory services for corn and soybeans. Results show that increasing the number of (equal-weighting) services reduces portfolio expected risk, but the marginal decrease in risk from adding a new service decreases rapidly with portfolio size. The risk reduction benefits of naïve diversification among advisory services is relatively small compared to the results obtained in previous studies for stock portfolios, and this is mainly because advisory prices, on average, are highly correlated. A one service portfolio has only a 20%, 16% and 32% higher expected standard deviation than the minimum risk naïve portfolio for corn, soybeans and 50/50 revenue, respectively. Most risk reduction benefits are achieved with small portfolios. For instance, a four service portfolio has only 5%, 4% and 9% higher expected standard deviation than the minimum risk naïve portfolio for corn, soybeans and 50/50 revenue, respectively. Based on these results, there does not appear to be strong justification for farmers adopting portfolios with a large number of advisory services. Farmers may well choose portfolios with as few as two or three programs, since the relatively high total subscription costs associated with larger portfolios can be avoided while obtaining most of the benefits from diversification.


Report 2003-01:  New Generation Grain Marketing Contracts

Date  Authors  HTML Format  PDF  
01/29/2003 Lewis A. Hagedorn, Scott H. Irwin, Darrel L. Good, Joao Martines-Filho, Bruce J. Sherrick, and Gary D. Schnitkey Click Here 156K
Abstract 

The purpose of this research report is to summarize the features of several types of “new generation” grain marketing contracts. Over the last several years, new types of grain marketing contracts have been developed by the grain industry in an attempt to improve the results of the marketing process for farmers. These products use automated pricing rules, discretionary marketing on the part of a professional advisor, options strategies, or some combination of all three; their goal is to achieve a price for the farmer near or above the “average” price offered by the market over a given time. Reports in the farm media suggest interest in new generation contracts has increased rapidly in recent years. This publication describes some of the contracts currently available and, where possible, provides examples of how each would perform in different market conditions.


Bulletin 2002-01:  Tracking the Performance of Marketing Professionals: 1995-2000 Results for Corn and Soybeans

Date  Authors  HTML Format  PDF  
04/23/2002 Scott H. Irwin , Joao Martines-Filho and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research bulletin is to summarize the pricing performance of professional market advisory services for the 1995-2000 corn and soybean crops. The pricing performance results over 1995-2000 suggest several key findings. First, advisory programs in corn do not consistently beat market benchmarks, but they do consistently beat the farmer benchmark. Second, advisory programs in soybeans tend to beat both market and farmer benchmarks. Third, in terms of 50/50 revenue, advisory programs only marginally beat market benchmarks, but consistently beat the farmer benchmark. Overall, there is mixed evidence that advisory programs as a group outperform market benchmarks, while substantial evidence exists that advisory programs as a group outperform the farmer benchmarks. Caution should be used when considering the results, due to the relatively small sample of crop years available for analysis. In particular, the presence of sharp downward price trends in most crop years makes it difficult to determine whether the 1995-2000 sample provides a statistically reliable picture of future differences in pricing performance.


Report 2002-01:  The Pricing Performance of Market Advisory Services In Corn and Soybeans Over 1995-2000

Date  Authors  HTML Format  PDF  
04/23/2002 Scott H. Irwin, Joao Martines-Filho and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to evaluate the pricing performance of market advisory services for the 1995-2000 corn and soybean crops. Certain explicit assumptions are made to produce a consistent and comparable set of results across the different advisory programs. These assumptions are intended to accurately depict "real-world" marketing conditions. Several key assumptions are: i) with a few exceptions, the marketing window for a crop year runs from September before harvest through August after harvest, ii) cash prices and yields refer to a central Illinois farm, iii) storage is assumed to occur at on-farm or commercial sites, and iv) marketing loan recommendations made by advisory programs are followed wherever feasible. Based on these assumptions, the net price received by a subscriber to market advisory programs is calculated for the 1995-2000 corn and soybean crops.

Market and farmer benchmarks are developed for the performance evaluations. Two market benchmarks are specified in order to test the fragility of performance results to changing benchmark assumptions. The 24-month market benchmark averages market prices for the entire 24-month marketing window. The 20-month market benchmark is computed in a similar fashion, except the first four months of the marketing window are omitted. The farmer benchmark is based upon the USDA average price received series for corn and soybeans in Illinois. The same assumptions applied to advisory program track records are used when computing the market and farmer benchmarks.

Four basic indicators of performance are applied to advisory program prices and revenues over 1995-2000. The results provide limited evidence that advisory programs as a group outperform market benchmarks, particularly after considering risk. In contrast, substantial evidence exists that advisory programs as a group outperform the farmer benchmarks, even after taking risk into account. Whether the superior performance of advisory programs versus the farmer benchmark is attributed to luck or skill depends on one's theoretical perspective. Efficient market theory favors a luck interpretation, while behavioral market theory favors a skill interpretation. Regardless of the theoretical perspective, there is little evidence that advisory programs with superior performance can be usefully selected based on past performance.


Report 2001-03:  1999 Pricing Performance of Market Advisory Services for Wheat

Date  Authors  HTML Format  PDF  
04/05/2001 Joao Martines-Filho, Darrel L. Good, and Scott H. Irwin Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in the 1999 crop year for wheat. Specifically, the average price received by a subscriber to an advisory service is calculated for wheat crop harvested in 1999. The average net advisory price across all 23 wheat programs in 1999 is $2.64 per bushel, $0.04 below the market benchmark price. The range of net advisory prices is substantial, with a minimum of $2.18 per bushel and a maximum of $3.38 per bushel. The average revenue achieved by following an advisory service is $163 per acre, $3.00 less than the market benchmark revenue. The spread in advisory revenue also is noteworthy, with the difference between the bottom- and top-performing advisory programs reaching almost $75 per acre. An advisory program’s net price or revenue received is an important indicator of performance. The tradeoff between pricing performance and risk also is likely to be of interest to producers. Contrary to the prediction of economic theory, a slight negative tradeoff between average net advisory price and risk is found. That is, producing higher net prices generally required that an advisory program over 1995-1999 take on less risk, and vice versa. Since the estimated correlation between price and risk is only –0.18, this counter-intuitive result is likely due to random variation and is not expected to persist over a longer sample. Only one advisory program in wheat outperforms the market benchmark when both price and risk are considered, while many have a lower price and higher risk. No program outperforms the benchmark based on average revenue and risk. It is important to emphasize that the pricing and risk performance results are based on five observations. This is a relatively small sample for estimating the true risks of market advisory programs. Hence, the return-risk results should be viewed as exploratory rather than definitive.


Report 2001-02:  The Role of Market Advisory Services in Crop Marketing and Risk Management: A Preliminary Report of Survey Results

Date  Authors  HTML Format  PDF  
Mar. 2001 Joost M.E. Pennings, Darrel L. Good, Scott H. Irwin and Jennifer K. Gomez Click Here 156K
Abstract 

The purpose of this report is to provide a preliminary summary of the results of a survey designed to help answer the questions about subscriber use of market advisory services. Importantly, this research is a cooperative partnership between the University of Illinois and the Data Transmission Network. The survey participants are commercial producers of major grain, oilseed and fiber crops, representing important agricultural areas of the US. The survey has three broad objectives, including 1) how US producers perceive the riskiness of various aspects of farming; 2) how US producers manage farm business risk, and 3) how US producers select and use market advisory services.


Report 2001-01:  Do Agricultural Market Advisory Services Beat the Market? Evidence from the Wheat Market Over 1995-1998

Date  Authors  HTML Format  PDF  
Mar. 2001 Mark A. Jirik, Scott H. Irwin , Darrel L. Good, Joao Martines-Filho and Thomas E. Jackson Click Here 156K
Abstract 

The purpose of this report is to address two basic performance questions for market advisory services in wheat: 1) Do market advisory services, on average, outperform an appropriate market benchmark? and 2) Do market advisory services exhibit persistence in their performance from year-to-year? Data on wheat net price received for advisory services, as reported by the AgMAS Project, are available for the 1995, 1996, 1997 and 1998 crop years. Not only do market advisory programs in wheat consistently fail to “beat the market,” their performance is significantly worse than the market. On average, market advisory service performance is about $14 per acre below benchmark revenue, an economically non-trivial amount by any reasonable standard. The predictability results provide little evidence that future advisory service pricing performance can be predicted from past performance.


Report 2000-04:  1999 Pricing Performance of Market Advisory Services for Corn and Soybeans

Date  Authors  HTML Format  PDF  
12/11/2000 Joao Martines-Filho, Darrel L. Good, and Scott H. Irwin Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in the 1999 crop year for corn and soybeans. Specifically, the average price received by a subscriber to an advisory service is calculated for corn and soybean crops harvested in 1999. The average net advisory price across all 26 corn programs in 1999 is $2.02 per bushel, three cents below the market benchmark price. The range of net advisory prices for corn is substantial, with a minimum of $1.66 per bushel and a maximum of $2.49 per bushel. The average net advisory price across all 25 soybean programs in 1999 is $5.67 per bushel, seventeen cents above the market benchmark. As with corn, the range of net advisory prices for soybeans is substantial, with a minimum of $4.68 per bushel and a maximum of $7.10 per bushel. The average revenue achieved by following both the corn and soybean programs offered by an advisory service is $299 per acre, $2.00 more than market benchmark revenue for 1999. The spread in advisory revenue also is noteworthy, with the difference between the bottom- and top-performing advisory programs reaching more than $100 per acre.


Report 2000-03:  Do Agricultural Market Advisory Services Beat the Market? Evidence from the Corn and Soybean Markets Over 1995-1998

Date  Authors  HTML Format  PDF  
11/17/2000 Scott H. Irwin, Darrel L. Good, Joao Martines-Filho and Thomas E. Jackson Click Here 156K
Abstract 

The purpose of this paper is to address two basic performance questions for market advisory services: 1) Do market advisory services, on average, outperform an appropriate market benchmark? and 2) Do market advisory services exhibit persistence in their performance from year-to-year? Data on corn and soybean net price received for advisory services, as reported by the AgMAS Project, are available for the 1995, 1996, 1997 and 1998 crop years. Performance test results suggest that, on average, market advisory services exhibit a small ability to "beat the market" for the 1995 through 1998 corn and soybean crops. It is debatable whether the performance of advisory services also is economically significant. The predictability results provide little evidence that future advisory service pricing performance can be predicted from past performance.


Report 2000-02:  The 1995 Through 1998 Pricing Performance of Market Advisory Services for Wheat

Date  Authors  HTML Format  PDF  
06/12/2000 Mark A. Jirik, Scott H. Irwin, Darrel L.Good, Thomas E. Jackson, and Joao Martines-Filho Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance from 1995 through 1998 for wheat. The average net advisory price across all 24 wheat programs in 1995 is $3.79 per bushel, $0.18 above the market benchmark price. The range in 1995 is $3.01 to $4.71 per bushel. The average net advisory service price for 23 wheat programs in 1996 is $3.82 per bushel, $0.13 below the market benchmark. The range in 1996 is $2.74 to $4.94 per bushel. The average net advisory price for all 20 wheat programs in 1997 is $2.64 per bushel, $0.58 below the market benchmark. The range in 1997 is $1.34 to $3.90 per bushel. Finally, the average net advisory price across all 21 services in 1998 is $2.36 per bushel, $0.54 below the market benchmark. The range in 1998 is $1.34 to $3.33 per bushel.


Report 2000-01:  1998 Pricing Performance of Market Advisory Services for Corn and Soybeans

Date  Authors  HTML Format  PDF  
02/04//2000 Darrel L. Good, Scott H. Irwin, Thomas E. Jackson, Mark A. Jirik and Joao Martines-Filho Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in 1998 for corn and soybeans. Specifically, the average price received by a subscriber to an advisory service is calculated for corn and soybean crops harvested in 1998. The average net advisory price across all 23 corn programs is $2.17 per bushel - seven cents below the market benchmark price. The net advisory prices for corn range from a minimum of $1.93 per bushel to a maximum of $2.51 per bushel. The average net advisory price across all 22 soybean programs is $5.82 per bushel - four cents less than the market benchmark. The net advisory prices for soybeans range from a minimum of $5.11 per bushel to a maximum of $6.58 per bushel.


Report 1999-04:  Surveying Farmers: A Research Note

Date  Authors  HTML Format  PDF  
October, 1999 Joost M.E. Pennings, Scott H. Irwin and Darrel Good Click Here 156K
Abstract 

Mail surveys are a very popular instrument for researchers as well as government agencies and commercial firms to obtain information about farmers. A large percentage of farmers do not respond to these mail surveys. To gain insight into why farmers do not respond and their preferences regarding mail surveys, farmers who did not respond to a mail survey were interviewed. From our field study it appears that a large proportion does not even read the questionnaire. Furthermore, the period in which the survey is sent along with the form and amount of compensation, the sender of the questionnaire, and the length of the questionnaire has a crucial impact on the willingness to participate.


Report 1999-03:  Do Agricultural Market Advisory Services Beat the Market? Evidence from the Corn and Soybean Markets Over 1995-1997

Date  Authors  HTML Format  PDF  
October, 1999 Scott H. Irwin, Thomas E. Jackson and Darrel L. Good Click Here 156K
Abstract 

The purpose of this paper is to address two basic performance questions for market advisory services: 1) Do market advisory services, on average, outperform an appropriate market benchmark? and 2) Do market advisory services exhibit persistence in their performance from year-to-year? Data on corn and soybean net price received for advisory services, as reported by the AgMAS Project, are available for the 1995, 1996 and 1997 marketing years. Performance test results suggest that, on average, market advisory services exhibit a small ability to "beat the market" for the 1995 through 1997 corn and soybean crops. This conclusion is somewhat sensitive to the type of performance test and market benchmark considered. The predictability results provide little evidence that future advisory service pricing performance can be predicted from past performance. When services are grouped by performance quantile, some evidence of predictability is found for the poorest performing services, but not for top performing services.


Report 1999-02:  The Marketing Style of Advisory Services for Corn and Soybeans in 1995

Date  Authors  HTML Format  PDF  
August, 1999 Roberto Bertoli, Carl Zulauf, Scott H. Irwin, Thomas E. Jackson, and Darrel L. Good Click Here 156K
Abstract 

The 1995 marketing styles for the 25 market advisory service programs included in the AgMAS Project were developed in two steps. The first step was the construction of a detailed "menu" of the tools and strategies used by each of the advisory programs in marketing corn and soybeans. The menu describes the type of pricing tool, frequency of transactions, and magnitude of transactions. The second step was the development of a daily index of the net amount sold by each market advisory program. To construct such an index, the various futures, options, and cash positions recommended for a program on a given day were weighted by the respective position "delta." When the daily values of the index were plotted for the entire marketing period, the marketing "profile" for a program was generated. The results show that advisory programs made a relatively small number of recommendations that primarily involved cash marketing strategies, not futures and options, non-cash marketing recommendations were typically held open for a short period of time, and the pre-harvest amount sold averaged 35 percent for corn and 30 percent for soybeans.


Report 1999-01:  1997 Pricing Performance of Market Advisory Services for Corn and Soybeans

Date  Authors  HTML Format  PDF  
02/04/1999 Thomas E. Jackson, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in 1997 for corn and soybeans. Specifically, the average price received by a subscriber to an advisory service is calculated for corn and soybean crops harvested in 1997. The average net advisory price across all 23 corn programs is $2.32 per bushel. The net advisory prices for corn range from a minimum of $2.00 per bushel to a maximum of $2.74 per bushel. The average net advisory price across all 21 soybean programs is $6.40 per bushel. The net advisory prices for soybeans range from a minimum of $6.08 per bushel to a maximum of $6.99 per bushel.


Report 1998-02:  Development of a Market Benchmark Price for AgMAS Performance Evaluations

Date  Authors  HTML Format  PDF  
01/26/1999 Darrel L. Good, Scott H. Irwin, and Thomas E. Jackson Click Here 156K
Abstract 

The purpose of this research report is to identify the appropriate market benchmark price to use to evaluate the pricing performance of market advisory services that are included in the annual AgMAS pricing performance evaluations. Five desirable properties of market benchmark prices are identified. Three potential specifications of the market benchmark price are considered: the average price received by Illinois farmers, the harvest cash price, and the average cash price over a two-year crop marketing window. The average cash price meets all of the desired properties, except that it would not be easily implementable by producers. It can be shown, though, that the price realized via a more manageable strategy of "spreading" sales during the marketing window very closely approximates the average cash price. Therefore, it is determined that the average cash price meets all five selection criteria, and is the most appropriate market benchmark to be used in evaluating the pricing performance of market advisory services.


Report 1998-01:  1996 Pricing Performance of Market Advisory Services for Corn and Soybeans

Date  Authors  HTML Format  PDF  
01/14/1998 Thomas E. Jackson, Scott H. Irwin, and Darrel L. Good Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in 1996 for corn and soybeans. Specifically, the average price received by a subscriber to an advisory service is calculated for corn and soybean crops harvested in 1996. The average net advisory price across all 26 corn programs is $2.63 per bushel. The range of net advisory prices for corn is quite large, with a minimum of $2.08 per bushel and a maximum of $3.12 per bushel. The average net advisory price across all 24 soybean programs is $7.27 per bushel. As with corn, the range of net advisory prices for soybeans is substantial, with a minimum of $6.80 per bushel and a maximum of $7.80 per bushel.


Report 1997-01:  1995 Pricing Performance of Market Advisory Services for Corn and Soybeans

Date  Authors  HTML Format  PDF  
11/07/1997 Darrel L. Good, Scott H. Irwin, Thomas E. Jackson, and Gregory K. Price Click Here 156K
Abstract 

The purpose of this research report is to present an evaluation of advisory service pricing performance in 1995 for corn and soybeans. Specifically, the average price received by a subscriber to an advisory service is calculated for corn and soybean crops harvested in 1995. The average net advisory price across all 25 corn programs is $3.04 per bushel. The range of net advisory prices for corn is quite large, with a minimum of $2.34 per bushel and a maximum of $3.81 per bushel. The average net advisory price across all 25 soybean programs is $6.61 per bushel. As with corn, the range of net advisory prices for soybeans is substantial, with a minimum of $5.75 per bushel and a maximum of $7.92 per bushel.



To obtain a hard copy of the report through the mail:
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Send request to:

AgMAS Project Office
406 Mumford Hall
1301 W. Gregory Drive
Dep. of Agricultural and Consumer Economics
College of Agricultural, Consumer and Environmental Sciences
University of Illinois at Urbana-Champaign
Urbana, IL 61801

Voice: (217)333-2792
Fax: (217)333-5538
E-mail: agmas@uiuc.edu


  

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