The Department of Economics, Iowa State University. We are indebted to Ronald Ward, who provided data on orange juice futures prices, and to Richard Allen and members of the National Agricultural Statistical Service, who helped locate the data on USDA forecasts. Helpful comments and suggestions were received from Mark Brown, Barry Falk, Robert Terry, Ronald Ward, and a referee. Angela Jewett and Sue Streeter prepared the manuscript.
The Rationality and Price Effects of U.S. Department of Agriculture Forecasts of Oranges
Article first published online: 30 APR 2012
1994 The American Finance Association
The Journal of Finance
Volume 49, Issue 2, pages 681–695, June 1994
How to Cite
BAUR, R. F. and ORAZEM, P. F. (1994), The Rationality and Price Effects of U.S. Department of Agriculture Forecasts of Oranges. The Journal of Finance, 49: 681–695. doi: 10.1111/j.1540-6261.1994.tb05157.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This article examines the effect of public information on the orange juice market. We investigate the rationality, information content, and price effects of U.S. Department of Agriculture forecasts of the production of oranges. U.S. Department of Agriculture forecasts are found to be unbiased and efficient. The first forecast contains the most new information, and subsequent reports become valuable only when freezes occur. Significant price movements occur in response to announced production in both Florida and California. However, the majority of price variations cannot be explained by these movements in supply.