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VALUE OF MARKET INFORMATIONWarren P. PrestonDeputy Chief EconomistNovember 15, 2016
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Market theory…
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…meets market reality
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Market information brings transparency back to the marketplace
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Thinning spot markets raise concerns about their role in price discovery
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Negotiated spot and alternative marketing arrangement (AMA) prices move together
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Fundamental economic forces have driven the adoption of AMAs…
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…and those drivers are not going away
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Should shift our thinking about spot markets as the locus of price discovery?
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Can AMAs play a larger role in price discovery?
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LMR is more than mandatory pricereporting—it provides market information
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Lack of information hinders price discovery and market efficiency
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Parting thoughts• Important to think about LMR in whole, not just its component parts
• Information is like grease—more is (usually) better
• Regulations are difficult to change, but laws are even more difficult to change
• There is no silver bullet to address thin market and price discovery issues
• If not LMR, then what?
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For more information:• Email:
• Office of the Chief Economist Homepage:• www.usda.gov/oce
• WASDE Secretary’s Briefing Slides:• http://www.usda.gov/oce/commodity/wasde/Secretary_Briefing.pdf