Weather Variation as a Cost‐Price Uncertainty Factor as It Affects Corn and Soybean Production

Abstract

The process of attempting to predict climate and its resultant impact on agricultural output and prices is hardly a new venture. Herschel conducted a detailed study of solar activity in the late 1700s, noting an apparent relationship with severity of climate. He subsequently compared these relationships with wheat price statistics compiled by Adam Smith. Wallace, in 1920, used multiple regression methods to estimate the impact of meteorological variables on corn yield. This work contributed to the idea of the ever-normal granary. A number of studies examining climatic variability and food reserve policy were developed in the mid-1960s at the Center for Agricultural and Economic Development at Iowa State University and in the U.S. Department of Agriculture (Thompson 1966). Review articles on climatic change and its impact on agriculture include Bryson, Kalnicky, Newman and Pickett, and Thompson (1975). This article reviews an attempt to integrate climate into priceforecasting methodology, to develop supply implications for use in formulation of inventory policy, and to assess impacts on cost of production.