Farmers often have opinions about prospective changes in prices of the commodities they produce or buy. For example, a farmer may expect the price of corn for December delivery to rise or fall as harvest approaches. If a price rise is confidently expected, then the farmer might want to wait and sell the crop after harvest. If the price is expected to fall, a larger than normal forward sale may be desirable. Farmers have both advantages and disadvantages compared with other traders when it comes to anticipating price changes.
Farmers are often the first to observe local weather and yield developments.
However, few farmers have the time and expertise to perform thorough price analyses themselves, nor the funds to hire the best professional advice. Fundamental analysis involves identifying and evaluating the factors that affect the supply and demand for a commodity and assessing their effects on price. Fundamental analysis ranges from informal assessment of the effects of the latest news on prices to the use of elaborate statistical models. The information needed for fundamental analysis of agricultural prices includes planting, weather, numbers of livestock raised or on feed, production, stock, exports, and general economic conditions. The U.S. Department of Agriculture collects and disseminates much of this information in its crop and livestock production reports.