Calculating a MYA Price

The calculation of the MYA price is the culmination of major data collection effort by the National Agricultural Statistics Service. I’m going to focus on corn, but the process is similar for most of the major grain crops. There are some significant differences in the way that NASS estimates the MYA price for some of the fruit, nut, meat, and other products. For those of you with time on your hands, many of the details associated with this effort can be found in this 285 page report.

The process involves NASS conducting a monthly survey from a sample of grain and oilseed buyers from approximately 1,900 mills and elevators. These buyers are selected from probabilistic sampling procedure meaning that not every buyer will be sampled, but in theory every buyer could be sampled. The buyers are selected in a way that allows NASS to create a state-wide and nationally representative estimate of the prices received. The survey is voluntary and requests that buyers report the total amount of grain purchased during the specified period and the total amount paid for the grain. This allows them to estimate a price per unit after adjusting and cleaning the data according to detailed protocols.

NASS makes a prior month estimate which considers all grain bought in the prior month and a mid-month estimate which asks about grain bought from the beginning to the middle of the current month. This is apparently how a November corn price estimate can be made before November is over.

NASS reports a statewide average price for most states that are important to production of a commodity. These monthly state estimates are then weighted by volume marketed to arrive at a preliminary estimate of national average price.  Chad Hart at Iowa State provides a good discussion of the process used to develop the weights here and a nice easy to use and well documented spreadsheet to estimate the MYA price here. The Economic Research Service models for corn, wheat, and soybean MYA forecasts (which some of the ISU model is based on) are available here.

MYA Prices on the Farm

The MYA seeks to provide a price that is reflective of the average price that farmers across the U.S. received for the crops that they sell. While this sounds nice, for an individual farmer the price may or may not reflect the prices that they actually received. A simple analogy might be the Census Bureau’s report of new single family home sales. The average for the entire U.S. in 2013 was $324,500 which would seem like a bargain if you lived in the Northeast where the average was 469,900. If however, you live in the South where the average was $292,600, it probably seems pretty high.

Such geographic variation is readily apparent in the data. In 2013 the U.S. MYA corn price was $4.46 per bushel. Corn Belt states such as Iowa, Illinois, Indiana, and Nebraska all had MYA prices within $0.06 of the national price. At the extremes, North Dakota was $0.55 lower at $3.91 per bushel and Texas was $0.68 higher at $5.14 per bushel. However, the geographic variation is likely low relative to the variation in what actual producers receive given their individual marketing decisions.  A graphic representation of the average of the differences across states is shown in Figure 1.