Journal #J-05/1999
Forecasting Prices at the Dutch Flower Auctions
Marie Steen & Ole Gjølberg
Department of Economics & Reesource Management Agricultural University of Norway PO Box 5033, N-1432 Ås, Norway http://www.nlh.no/ior/ e-mail: marie.steen@ior.nlh.no   and   ole.gjolberg.@ior.nlh.no

Steen, M. & O. Gjølberg (1999): "Forecasting Prices at the Dutch Flower Auctions", Journal of Agricultural Economics, 50(2):258-268

Abstract:
Prices at the Dutch flower auctions are extremely volatile. Price changes of +/- 20 per cent one week to the next represents a normal event, and +/- 50 per cent is not uncommon. Since production planning in the flower business offers a complicated variation over the Newsboy Problem, good price forecasts would improve decision making on space allocation; what species to plant; the timing of harvesting, etc. This paper analyses weekly prices for three major species, i.e., roses, chrysanthemums and carnations, 1993-1996. We find that there are strong calendar regularities particularly for roses and chrysanthemums. Establishing a model in which we combine information on seasonal regularities and autoregressive price patterns, we manage to explain a substantial part of the short-term price variability for all three species. The model is tested in an out-of-sample dynamic forecasting experiment during the first 35 weeks of 1997.

Key words: Flower prices, forecasting, flower auctions, price variability, autoregressive price patterns.

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