Forecasting Cotton prices in Warangal District - an empirical analysis

Abstract

Forecasting prices of agricultural commodities is important from the farmer's point of view for making agriculture profitable. Domestic forecast of cotton prices in USA is expecting a slash of six per cent due to price support policies of the developing world especially India, according to a report from Texas Tech University's, Cotton Economics Research Institute (CERI) (Darren Hudson, 2009). A periodic review of the dynamics of various local, national and international factors and their inclusion into the models for forecasting prices of various crops would help farmers in choosing crop plans and consequently in realizing remunerative prices for their produce. lsengildina-Massa et al (2009) developed a model which forecasted changes in the U.S. upland cotton farm price based on changes in U.S. cotton supply, changes in U.S. stocks-to-use ratio (S/U), changes in China's net imports as a share of world consumption, selected farm policy parameters, and changes in the foreign supply of cotton. Cotton is one of the important commercial crops in India. India's importance could be realized by its influence on world cotton prices as discussed above.