Date of this Version
Cornhusker Economics, March 29, 2000, agecon.unl.edu/cornhuskereconomics
One of the characteristics of the feedgrain sector in recent years has been its large year to year price fluctuations. There are two possible causes for these fluctuations in prices: 1) short-run (one year or less) changes in domestic and export demands, and (2) weather-related shifts in the supply of feedgrains in the face of a feedgrain demand, which exhibits little price responsiveness in the short-run. While both aspects may be involved, here we will examine only the second issue of why fluctuations in domestic feedgrain supply result in such wide fluctuations in prices, due to feedgrain demand being so unresponsive to short-run prices.