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.
Technical analysis involves searching for patterns in price movements that repeat over time.
The objective is to recognize a pattern as it begins to develop, and to trade accordingly. The traditional method is to plot the price series on a chart and watch for patterns. Another common approach is to search for trends by comparing the latest price with a moving average of past prices. Computers greatly facilitate the use of technical price forecasting methods. A number of firms sell charts of daily commodity futures prices, and many books on technical analysis are available.