A Bayesian analysis of hop price fluctuations

Douglas MacKinnon and Martin Pavlovič
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Douglas MacKinnon: Department of Agriculture Economics and Rural Development, Faculty of Agriculture and Life Sciences, University of Maribor, Maribor, Slovenia
Martin Pavlovič: Department of Agriculture Economics and Rural Development, Faculty of Agriculture and Life Sciences, University of Maribor, Maribor, Slovenia

Agricultural Economics, 2020, vol. 66, issue 12, 519-526

Abstract: This paper quantifies the correlation between U.S. season average prices for hops with U.S. hop stocks and U.S. hop hectarage. The Hop Equilibrium Ratio, a measure of the supply/demand relationship for U.S. hops, was introduced. Through the Bayesian inference method, the authors used these data to calculate the effect an incremental change to one metric had on the probability of directional changes of future U.S. season average prices (SAP). Between 2010 and 2020, the dominance of proprietary varieties created unprecedented cartel-like powers offering opportunities for supply- and price-management. Research results will enable more accurate forecasting and greater price stability in the hop industry.

Keywords: alpha-acids; Bayesian theorem; brewing industry; economies of scale; equilibrium; hop market (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:66:y:2020:i:12:id:239-2020-agricecon

DOI: 10.17221/239/2020-AGRICECON

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