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Abstract

Monthly WASDE reports by USDA estimate current and future global supply-utilization balances for various commodities, including corn. Existing literature has shown that markets respond to WASDE releases (news effects) but has not quantified the value or distribution of benefits from those reports. We use Monte Carlo simulations of a quarterly model of the U.S. corn market to estimate the value of the WASDE forecast and its components. Our results show significant value to market participants from the WASDE reports, roughly $301 million or 0.55% of overall corn market value. The results also show significant value for each forecasted component of the reports: area ($145 million), yield ($188 million), production ($299 million), demand/stocks ($300 million) and exports ($320 million). The benefits of each component do not strictly sum when new information is added because substantial redistribution of benefits occurs, since specific information components help specific interest groups. The expected benefits or losses realized by consumers, producers or traders is often nearly as large as (and sometimes larger than) the net benefits to society from better information. In the base case benefits from WASDE information largely accrues to producers ($153 million) and consumers ($341 million). Traders lose $192 million, as they are presumed to buy at harvest, before valuable demand, stocks and export data is known. Farmers behave as traders when they choose to store, sell forward, or participate directly in futures markets. Thus, the net trader benefit or loss accrues partially to farmers as traders and partially to commercial agents. These results are sensitive to elasticity assumptions that capture both how agents behave in markets and how their welfare is measured.

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