The ICAC Secretariat has been forecasting season-average cotton prices since 1988. In 2007, after two seasons of very poor forecasting results, the Secretariat adopted a new econometric model, based on fundamental factors of the world cotton economy:stocks-to-mill use ratios and trade. The model uses four explanatory variables, which are themselves combinations of estimates and projections of stocks and mill use, trade, and judgment on whether Chinese trade is dominated by government actions or by private activity. Forecasts generated with the 2007 ICAC Price Model were published monthly from August 2007 to February 2011. In 2011, the model results were highly unsatisfactory within the environment of record-high-volatility.
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