Idaho Researcher Helps Develop Promising Alternative Commodity Price Predictive Model

Apr 19, 2023

By John O’Connell

A University of Idaho researcher helped to create a commodity markets forecasting model that rivals USDA’s two preferred models at predicting corn prices.

Xiaoli Etienne, Idaho Wheat Commission endowed chair in commodity risk management, started work on the project while employed at West Virginia University (WVU), where she received a $20,000 grant from USDA’s Economic Research Service to fund the effort.

Etienne and her colleagues have continued perfecting the model since she joined U of I.

Etienne’s team included her former graduate student at WVU, Sara Farhangdoost, and USDA ERS economists Linwood Hoffman and Brian Adam.

Their paper, “An Alternative Method to Forecast the Season-average Price for U.S. Corn,” is currently in revision for publication in the Journal of Commodity Markets.

The alternative model they created uses only publicly available data, unlike the agency’s go-to forecast, the World Agricultural Supply and Demand Estimates, which Etienne describes as using a “black box” model.

WASDE is released monthly based on a top-secret equation and private data, including global market factors often unknown by the public.

USDA’s WASDE forecast has major implications, as it can influence markets and producers’ planting decisions and is used for calculating government payment programs.

The new alternative model slightly outperforms WASDE from January through April.

“Whether it’s economically significant, that’s another paper to write,” Etienne said.

Their model tracks closely with WASDE throughout the rest of the year – with WASDE having a slight edge during the growing season.

In most months, their alternative model also outperforms the other model commonly used by USDA ERS – the Hoffman model developed by Etienne’s team member Linwood Hoffman.

The Hoffman model bases its forecasts on publicly available futures price data. Futures contracts involve locking in future delivery of a commodity at a price set today.

Etienne’s alternative model also relies heavily on futures prices, but it adds in current cash prices, providing some real-world data while recognizing many commodities aren’t sold on the futures market.

Etienne’s alternative model is slightly more laborious to calculate than the Hoffman model, requiring regression analysis – statistical processes for evaluating the strength of relationships between elements.

Both the Hoffman model and the alternative model offer far greater flexibility than WASDE reports, as they can be computed by any economist at any time, while WASDE is secretive and publishes at a set time of each month.

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Video: Spring 2026 weather outlook for Wisconsin; What an early-arriving El Niño could mean

Northeast Wisconsin is a small corner of the world, but our weather is still affected by what happens across the globe.

That includes in the equatorial Pacific, where changes between El Niño and La Niña play a role in the weather here -- and boy, have there been some abrupt changes as of late.

El Niño and La Niña are the two phases of what is collectively known as the El Niño Southern Oscillation, or ENSO for short. These are the swings back and forth from unusually warm to unusually cold sea surface temperatures in the Pacific Ocean along the equator.

Since this past September, we have been in a weak La Niña, which means water temperatures near the Eastern Pacific equator have been cooler than usual. That's where we're at right now.

Even last fall, the long-term outlook suggested a return to neutral conditions by spring and potentially El Niño conditions by summer.

But there are some signs this may be happening faster than usual, which could accelerate the onset of El Niño.

Over the last few weeks, unusually strong bursts of westerly winds farther west in the Pacific -- where sea surface temperatures are warmer than average -- have been observed. There is a chance that this could accelerate the warming of those eastern Pacific waters and potentially push us into El Niño sooner than usual.

If we do enter El Nino by spring -- which we'll define as the period of March, April and May -- there are some long-term correlations with our weather here in Northeast Wisconsin.

Looking at a map of anomalously warm weather, most of the upper Great Lakes doesn't show a strong correlation, but in general, the northern tiers of the United States do tend to lean to that direction.

The stronger correlation is with precipitation. El Niño conditions in spring have historically come with a higher risk of very dry weather over that time frame, so this will definitely be a transition we'll have to watch closely as we move out of winter.