Price Information in Cotton Markets: An Alternative, Objective Approach for Deriving Market Price Differentials for Quality
نویسنده
چکیده
Introduction There has been recent discussion about price information and how it affects the cotton market (Ethridge and Hudson), as well as related topics of how the official price information provided by the Agricultural Marketing Service (AMS) affects the Commodity Credit Corporation's (CCC) loan schedule. These discussions have centered around (1) how information about differentials in price due to quality (premiums and discounts) are derived from cotton prices and (2) how that information is used in determining premiums and discounts for the CCC loan schedule. Before the second issue can be addressed, a full understanding of the first must be achieved. The objectives of this paper are to (1) describe how price differential information is currently derived by AMS, (2) describe an alternative approach to deriving premium and discount information that may be able to improve the accuracy of price information, (3) discuss the advantages and disadvantages of each approach, and (4) discuss the importance of accurate price information for the cotton industry.
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