The outlook for international agricultural commodity markets is very sensitive to changes in macroeconomic conditions, rates of productivity growth, and government policies. Baseline projections prepared by the Food and Agricultural Policy Research Institute in March 1988 assume moderate rates of economic and productivity growth, and a continuation of current policies. Under these conditions, world production, use, and trade of grains and oilseeds increase at a modest pace, while real prices change little.
More rapid world economic growth and lower rates of inflation result in significantly higher real prices for wheat, feed grains, and soybeans. World trade expands as demand grows more rapidly than supply in importing countries. Increased rates of productivity growth result in lower commodity prices and a contraction of world trade as importing countries become more self-sufficient. Removing trade barriers causes significant shifts in world production and consumption of agricultural commodities, but only modest changes occur in world prices.
Johnson, Stanley R.; Meyers, William H.; and Westhoff, Patrick C., "Agricultural Market Outlook and Sensitivity to Macroeconomic, Productivity, and Policy Changes" (1988). CARD Working Papers. 71.