THE RATIONALITY AND PRICE EFFECTS OF UNITED-STATES DEPARTMENT-OF-AGRICULTURE FORECASTS OF ORANGES

This article examines the effect of public information on the orange j uice market. We investigate the rationality, information content, and price effects of U.S. Department of Agriculture forecasts of the produ ction of oranges. U.S. Department of Agriculture forecasts are found t o be unbiased and efficient. The first forecast contains the most new information, and subsequent reports become valuable only when freezes occur. Significant price movements occur in response to announced prod uction in both Florida and California. However, the majority of price variations cannot be explained by these movements in supply.