GROWMARK Report Studies Stocks-to-Use

Cindy Zimmerman

growmarklogoA new report from GROWMARK Research challenges the commonly accepted notion that ending stocks are a primary determinant of agricultural commodity prices.

In the report, GROWMARK economic and market research manager Kel Kelly shows that stocks are inversely correlated with prices, but that the correlation occurs within a limited price range, meaning that stocks do not dictate the extent of the price moves. “Stocks do not influence overall price levels,” says Kelly, adding that the correlation is often reversed – changes in prices cause changes in stocks.

growmark-kelThe report titled “Stocks and the Stocks-to-Use Ratio: Are they meaningful for price determination?” indicates that fear of running out of stocks is likely based more on perceptions than on reality, as there is not much evidence that the marketplace takes strong action to compensate for missing supply in years of low production.

Listen to Kelly explain his findings in this interview: Interview with Kel Kelly, GROWMARK

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