Friday, October 8, 2010

Big inventory adjustment, big price spike

It is odd to have such a large inventory adjustment this late in the season.  Usually, most of the news about the size of crop is out by September.


What happened?

For economics geeks, this does provide a fairly powerful natural experiment for measuring the fundamental relationship between inventories and prices, since this large short-run move in prices likely has very little to do with a shift in demand.

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