For changing prices over time, can you distinguish between demand and supply growth?
Potentially Important Elements to include in analyzing a Commodity Market (examples only)
- World price levels, and path since ~2000 or preferably back longer; world market vs local market
- For changing prices over time, can you distinguish between demand and supply growth?
- Is price volatility especially significant?
- Output levels, worldwide vs local country
- Time series: is production growing or stable? Is there any likely explanation (e.g., from previous research)?
- Information on technical change, yield growth, other productivity questions
- Where is research taking place? Which countries are leaders in technology changes, or is it in CGIAR centers?
- Yield threats due to pests, diseases, climate changes?
- Other production-related issues?
- Time-related: changing comparative advantages across countries?
- Special Issues: Different qualities for sale, any quality distinctions in pricing, output
- Different varieties if differences in qualities are less important (e.g., in apples)
- By-products of importance
- Key producing countries, importing countries
- Proportion of world output that is traded (thickness or thinness of market)
- Policy measures in domestic market(s)? Alternatively, are there important market institutions?
- Any that have impact on world prices
- Linkages between domestic market and world market?
- Particular segmentation of world market? Price discrimination against certain markets?
- Value added in processing? What share of wholesale price received by farmers?
- Processing-related issues? Joint products? Concentration? Dynamics over time?
- Example 1: Ethiopian coffee key issues. Net exporter of generally very good quality coffee; wide range of prices from no capture of quality premium to a strong premium (available only to direct exporters); few firms, coops can export directly and all others must sell through exchange with no quality premium; competitive trading system; all smallholder coffee (no plantations); growing domestic consumption reducing quantity available for export; price trend not known; tight linkage between export and domestic markets; Ethiopia mostly a price-taker on world markets, but with potentially large quality premium.
- Example 2: Key Issues from Vietnamese export/production patterns and growth
- incredibly rapid production growth; equally rapid export growth
- shift from ‘small country’ to ‘large country’ in those 6-7 commodities
- little government ‘support’; no subsidy, little input market provision (via policy)
- role of SOEs?
- Expectation of future export growth? Would you invest in VN’s export commodities?
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