CONTENTS

1.0 Market Definition Overview

2.0 Assignment Details

2.1 Title Page

2.2 Purpose Statement and Footnote

2.3 Methods Statement

2.4 Commodity Characteristics

2.5 Primary Producers

2.6 Primary Consumers

2.7 Marketing Chain

2.8 Analytical Time Period

2.9 Global Production Areas

2.10 Market Space

2.11 Exchange, Valuation, and Transportation

2.12 Current Market Equilibrium 

1.0 MARKET DEFINITION OVERVIEW

The Market Definition assignment is the first of two content-focused assignments. Before you begin the Market Definition assignment, your instructor will assign you a global commodity market to analyze and/or will invite you to communicate which market you prefer to analyze. 

The goal of this assignment is to define the necessary context of your market analysis so that your readers will your market forecast (i.e., your second assignment). Typically your instructor will assign you a global commodity market to analyze. If not, your instructor may require you to complete an earlier assignment where you propose which commodity you want to analyze and, if needed, where you plan to get the required data to define the initial market equilibrium price and quantity.

This text describes in very prescribed ways how you must complete this assignment. After each prescribed item below, you will see in parentheses the typical number of paragraphs (P) needed (e.g., "1-2P" means "1 to 2 paragraphs are typically needed"). The outline also indicates when a figure (F) or table (T) is typically needed or required. Details about how to create and format figures and tables is in the "Figures and Tables" section of the "Resources" chapter. 

Your Market Definition assignment must include:

1. An informative title and title page with one artistic visual aid, your name, email address, phone number, and date. (1F)

2. A purpose statement paragraph, appropriately adapted as prescribed, that includes a prescribed footnote. (1P)

3. A methods statement paragraph, that is adapted appropriately as prescribed. (1P)

4. A description of the commodity's defining characteristics, including general and technical descriptions and a comparison to other products that are similar but not the same. (3-6P and 1F)

5. A description of the attributes of the market's typical primary producers, including their important inputs and required technologies. (3P and 1F)

6. A description of the attributes of the market's typical primary consumers. (1P)

7. A description of the market's marketing chain, including a description of any defining demographic, income, or educational characteristics of consumers in major upstream and downstream markets. (1-2P and 1F)

8. A statement specifying the analytical time period and a description of the rationale (1P)  

9. A description of the commodity's important global production areas. (1-2P and 1F)

10. A rationale for why the commodity's market space is global. (1-3P)

11. A description of how the commodity is exchanged, transported, stored, and typical levels of spoilage or degradation, if any, and a description of the commodity's typical unit(s) of exchange and unit(s) of valuation. (2P and 1F)

12. A description of the market's current equilibrium price and quantity. (1P and 1F)

To submit your assignment, follow the assignment submission instructors provided to you by your instructor in the course syllabus or on the course site of your institution's learning management system.

2.0 ASSIGNMENT DETAILS

Study and follow the detailed instructions given below for each of the prescribed sections of this assignment. 

2.1 Title Page

For this part of your report, I want you to create a title page with an artistic visual aid. You need an informative title, a properly and attractively designed visual aid used in an artistic rather than formal way, and the prescribed contact information. All of these items should be attractively arranged on a single title page.

Title. You need to create an informative title. Technically, this will be a "working" title since you may change it as you learn more from your analysis.  

Titles of technical communication documents should be clear and useful. These factors may weigh against a "catchy" title. While a catchy title might attract additional readers or viewers, technical communication may not be intended for a large, broad audience. Useful and clear titles are often direct and informative. Technical communication also aims to be true and logically organized. Technical communicators are expected to be people that readers and listeners can trust as judicious and logical. A catchy title may lead readers to doubt the seriousness of the author or presenter. For these reasons, you may want to avoid catchy titles like:

• (avoid) "Don't Horse Around with Gold: An Analysis of a High-Value Global Commodity from 2023 to 2028"

You might identify two or three words that summarize your analysis and a short plain description separated by a colon (:). Here are a few examples:

• "Robots, Inequality, and Crypto: A Market Analysis of Gold as a Global Commodity from 2023 to 2038"

• "Trade Barriers and Climate Change: The Future of Soybeans, 2023 to 2033"

• "Housing Stocks, Household Income, and Forest Parcelization: The Global Market for Sawnwood from 2023 to 2028" 

You might consider other ways to use a colon in your title. A colon is a punctuation mark that separates two ideas, the second of which expands or illustrates the first. For example, you might adapt and/or combine one of the following titles:

• "The Global Market for Crude Oil: 2023 to 2028"

• "An Analysis of Nitrogen Fertilizer: Forecasting Global Market Conditions from 2023 to 2033"

• "A Global Coffee Market Forecast: 2023 to 2038"

As always, the first, last, and all important words in a title should be capitalized. Titles are not sentences and should not have ending punctuation unless the title is a question in which case a question mark is appropriate. Titles should be enclosed in quotation marks except when a title is used as a title (e.g., as a heading for a written report). Shorter titles are better than longer titles, all else being equal. 

Contact Information. Include on your title page your first and last names, your official school email address, and a contact phone number.

Date. Include on your title page the publication month and year. 

Artistic Visual Aids. Include on your title page one or more images artistically adapted as a visual aid. To create a visual aid, you will need to read the entire "Figures and Tables" section of the Resources chapter. You will need to pay particular attention to the details about "Artistic Visual Aids" that are at the end of the "Format" section. Most technical reports include images or other visual aids used in artistic ways on the title page (Figure 1). 

2.2 Purpose Statement and Footnote

After your title page, insert a section heading (use bold text) titled "Purpose Statement." This will be a single paragraph that will explain what you will analyze and why (i.e., your purpose statement). The purpose statement is a single paragraph that clearly and succinctly describes the useful purpose of the analysis. 

Your purpose statement paragraph must start with a single sentence that captures as succinctly as possible what you will do in your analysis. Follow the format below as closely as possible: 

• This report defines and examines the current global commodity market for ______[1]______ from ______[2]______ to ______[3]______. 

In the first blank [1], insert the name of global commodity that you will analyze. Be mindful of technical terminology. It is not common in technical communication for two terms to have same meaning (i.e., be synonyms). Make sure that the words you use have the meanings you intend. In the second blank [2], insert the calendar year that your analysis starts. Because your analysis is a "current" market analysis, the start year for your analysis should be as recent as possible given your ability to estimate your own or find other's estimates for a recent global market price and quantity (e.g., see data appendix). In the third blank [3], insert the calendar year that your analysis ends. Typically, current market analyses span a period of five to 15 years for reasons explained later in the "Analytical Time Period" section of this chapter. 

Consider some examples. As similar as these examples are to each other, that is how similar the first sentence of your purpose statement should be. Keep in mind that these are all examples of "current" market analyses, meaning that the starting year of the analysis (i.e., 2023) is the most recent year for which these analysts were able to estimate their own or find another's estimate for the market price and quantity. Your text does not need to be in italics.

• This report defines and examines the current global commodity market for sawnwood from 2023 to 2028.

• This report defines and examines the current global commodity market for cotton from 2023 to 2033.

• This report defines and examines the current global commodity market for coffee from 2023 to 2038.

• This report defines and examines the current global commodity market for gold from 2023 to 2028.

• This report defines and examines the current global commodity market for crude oil from 2023 to 2033.

The remainder of your purpose statement paragraph must include several sentences that specifically explain why analysis of this market at this time will be useful. Avoid vague claims, for example, about the enormous size or significance of the market or the commodity. Instead, explain that your analysis will be more recent and/or lower cost (i.e., free) compared to other, existing analyses of the market. Identify and cite these other analyses that are older or more costly for comparision. The longer ago that a market analysis like yours (i.e., a free analysis) was published, the stronger your justification will be for doing one now. Another good justification for doing a current market analysis is that the product is expected to be traded in commercial quantities during the period you propose for your analysis. These two facts alone (i.e., no recently published low-cost analysis and continued commercial relevance) are generally sufficient to justify a claim that your current market analysis will be useful.

Your purpose statement paragraph must end with a prescribed footnote, as described just below.

Okay, at this point you might be wondering, "How can I just cut-and-paste the exact wording from this online textbook into my paper without giving proper attribution?". Great question. To avoid plagiarism, one option would be to distinguish clearly your work from the work that Roger Brown (i.e., the author of this textbook) did using quotation marks and proper citations (see the "Attribution, Citations, and Plagiarism" section of the Resources chapter). In academia, this is the default expectation. Another option is to alter clearly this default expectation. 

The problem with the first option is that it will require you to interrupt your writing constantly with distracting and intrusive citations and quotation marks. In some writing assignments, that might be necessary, for example, if your instructor says that you must follow the default expectation regarding originality. The writing assignments in this text allow you--within prescribed limits--to modify the default originality expectations. Thus, you can follow the second option (i.e., establish clearly alternate expectations regarding originality). If this sounds confusing, you should read the "Attribution, Citation, and Plagiarism" section in the Resources chapter of this textbook now.

To alter the default originality expectations and keep your text nice and tidy, you will (must) simply add a footnote to your text that clearly explains to your readers the alternate expectations. This should be done at the earliest possible opportunity. A footnote placed at the end of your first paragraph that informs the reader what the altered expectations regarding the originality of your work is generally sufficient. 

This will be a prescribed footnote. This footnote must go at the end of the last complete sentence of your purpose statement paragraph. Here is the text of that prescribed footnote:

• This analysis follows the standard scholarly expectations regarding originality. The author, for instance, clearly identifies and distinguishes all work (e.g., data, images, and ideas) taken wholly or in part from any external source. The one exception is that the author adapts without further attribution some specific analytical techniques, organization, and wording prescribed by Roger Brown’s online textbook, Technical Communication in Economics, accessed on _____[1]_____ at https://a.triplesilver.com. Also, in preparing this report, the author used _____[2]_____  to assist with editorial layout, design, and authorship. 

In the first blank [1], insert the date that you first accessed the online textbook (e.g., "September 21, 2023"). In the second blank [2], you must insert the name(s) and in parentheses the version(s) of the editorial layout, design, and/or authorship tool(s) that you used (e.g., Microsoft Word, Google Docs, ChatGPT or other large language models, etc.). For example, you might write, "In preparing this report, the author used Microsoft Word (2021) and ChatGPT (2023) to assist with editorial layout, design, and authorship."

Here are a few clarifications. First, if you do not know what a footnote is or how to insert a footnote easily into your own text, you should read the "Credibility, Evidence, and Footnotes" section in the Resources chapter of this text.

Second, the above footnote should not be in italics or bulleted when you cut-and-paste it into your paper, except that the title of the textbook should be (as always) italicized or underlined. 

Third, if during the course of conducting your analysis, you receive from a classmate or other reviewer editorial help with grammar, spelling, and/or formatting or other kinds of similarly minor assistance (e.g., a suggestion to consider a different demand or supply shift factor), you must add to the above footnote recognition of those specific individuals and their specific minor contributions. Here is the additional text you should add to the above prescribed footnote:   

• This analysis follows the standard scholarly expectations regarding originality. The author, for instance, clearly identifies and distinguishes all work (e.g., data, images, and ideas) taken wholly or in part from any external source. The one exception is that the author adapts without further attribution some specific analytical techniques, organization, and wording prescribed by Roger Brown’s online textbook, Technical Communication in Economics, accessed on _____[1]_____ at https://a.triplesilver.com. Also, in preparing this report, the author used _____[2]_____  to assist with editorial layout, design, and authorship. The author wishes to acknowledge minor helpful contributions from _____[3]_____ who improved earlier drafts of this report with their helpful suggestions, including help with grammatical, spelling, and formatting errors. Any remaining mistakes are the responsibility of the author.   

In the third blank [3], insert the name(s) of the person(s) who provided you with basic assistance.

Be careful! These footnotes tell readers that you (the author) do not make any efforts to distinguish your work from any of the work found in this (Brown's) online textbook but that you do make every effort to distinguish clearly your work from everyone else's work (i.e., all work that is not Brown's and not yours). Also, be aware that, as noted in the "Overview" chapter of this textbook, you are not authorized to and must not copy, adapt, modify, or use any analysis from any former student or any other analysis that uses this textbook.

If you have been assigned to use this text for your class, you can assume that your instructor is okay with you using this prescribed footnote to alter the default originality expectations, allowing you to copy-and-paste or otherwise adapt anything from this text without attribution, provided you include the above footnote in your text as prescribed. If your instructor has authorized you to work in groups with other students, be sure that you are clear how much and what kinds of assistance from your fellow group members your instructor has authorized. The extended version of the footnote above does not typically, for instance, authorize you to copy the ideas, wording, or formatting (i.e., the "work") of any other person, including a fellow student.  

2.3 Methods Statement 

After your purpose statement paragraph, insert a section heading (use bold text) titled "Methods Statement." A methods statement is typically a single paragraph that tells clearly and succinctly how you will conduct your analysis step-by-step. Whereas your purpose statement identifies briefly what you will analyze and why, your methods statement describes briefly how you will perform that analysis.  

For this assignment, you must cut the methods statement paragraph below and paste it into your report as your second paragraph. You should edit the font and font size, of course, to match your preferences.

• In this analysis, the author first explains what ______[1]______ is and the characteristics that distinguish this commodity from other, similar products. Second, the author describes the general attributes of producers and consumers in the global commodity market and distinguishes that market from other related upstream and downstream markets. Third, the author explains why the marketing area for this product is global. The author concludes Part One with an estimate of the current global equilibrium market quantity and price in ______[2]______. In Part Two of this report, the author identifies expected future shifts in market supply and demand and their impact on market quantity and price from ______[3]______ to ______[4]______.

In the first blank [1], insert the name of the global commodity that you are analyzing. In the next blanks (i.e., [2] and [3]), insert the calendar year for the start of your analytical time period. In the fourth blank [4], insert the calendar year for the ending year of your analytical time period, namely some year between five and 15 years after the year that you entered in blanks [2] and [3].

2.4 Commodity Characteristics

Next, insert a section heading (use bold text) titled "Commodity Characteristics." Look again at your prescribed methods statement. That paragraph says that you will first explain what your global commodity is and the characteristics that distinguish that global commodity from other, similar products. So, that is what you need to do next.

This section describes how to do that. Specifically, you need to describe the commodity's defining characteristics, including general and technical descriptions of the commodity and a comparison to other products that are similar but not the same. According to the prescribed outline (see the Overview chapter), this should require about three to six well-crafted paragraphs plus footnotes with sources, supporting evidence, and other details. You should also have one thoughtfully selected and properly formatted figure (i.e., "Figure 1") showing how the commodity looks. See the "Figures and Tables" section of the Resources chapter.

Commodities are agricultural or industrial products, usually in their raw or incompletely processed form, that have widely accepted production, distribution, and quality standards, meaning essentially that each unit of exchange is homogeneous. These quality standards are the characteristics that define the commodity and that distinguish the commodity from other, similar products, including other higher or lower quality versions (also called 'grades') of the commodity. 

Any brief internet search will point you to multiple websites that list often different sets of defining characteristics for your commodity. Be careful! You need to study these lists of defining characteristics closely, comparing and contrasting multiple descriptions. You need to look at and consider the sources of these descriptions. You need to distinguish general or popular descriptions of the commodity versus technical descriptions. You need to distinguish original versus secondary sources. 

Every commodity has grades (or types) and each grade has its own list of defining characteristics, including quality standards. You need to study and familiarize yourself with the different technical ways that your commodity is graded and the quality standards that apply to each of the different grades. You also need to understand how different groups of people (e.g., technical and non-technical groups) use whatever general term is to identify your commodity (e.g., "cotton" versus "American Upland middling cotton"). You need to understand and clarify for yourself whether any particular commodity definition you use in your analysis is or is not an (or the) internationally standard identifying term. 

Show That There Are Many Definitions. Start this section of your report with at least one paragraph that describes the range of ways that your commodity can be defined and how one single term (e.g., "cotton" or "crude oil") can and does have different meanings to different groups. For instance, you might note and give an example showing that popular definitions used in mass media sources differ from technical definitions used by commodity graders and brokers. The initial goal of this section is to show your readers that you recognize, understand, and know how to talk appropriately about this diverse nomenclature. It is not sufficient merely to quote only language from a single--even official--source. Avoid describing the commodity in ways that do not specifically help the reader (1) understand what the thing is or (2) understand what the thing is not. Avoid simply giving a long technical description about the product (e.g., about the history of the good or about how the market is 'growing'). When defining the characteristics of a market, avoid giving information that does not help with that task. 

To demonstrate you are a knowledgeable and credible analyst, you need to study multiple sources and descriptions of your commodity so that you understand the differences. Your aim is to add value by using new words (i.e., your own words) to describe, clarify, contrast, and summarize for your reader these admittedly technically complex distinctions.

Identify a Specific Definition. End this section of your report by telling your readers how, for the purposes of your analysis, you will define your commodity. After you reveal and distinguish the many different ways one could define your commodity, your reader will want you to be specific about what you mean by "wheat", "aluminum", or "beef". For example, after explaining the varied popular and other meanings of a term like "cotton" (e.g., the USDA has 25 different color grades for cotton and 15 physical grade standards for American Upland cotton), you need to tell the reader how you will define that term for the purposes of your analysis. You need to explain to your reader how will you define your commodity for purposes such as measuring the current and forecasting the future market quantity. 

Often this is where in your writing you need to add a sentence that starts:

• For the purposes of this analysis, I define ______[1]______ as ______[2]______. This technical definition is the same definition used by ______[3]______ which publishes the best global production data currently available.

In the first blank [1], insert the name of the commodity. In the second blank [2], insert the specific technical definition that that you will use to distinguishes the product that your analysis will cover from other similar products that your analysis will not cover. In the third blank [3], insert the source of the market quantity data (e.g., FAO, USGS, or industry association) from the data appendix (see explanation below).

Find the Best Available Data. You need to think carefully about what specific technical definition you will use to define your commodity for the purposes of your analysis. Perhaps highest among your considerations should be how the available market data defines the commodity. Later, as part of this assignment, you must estimate the current global market price and quantity for your commodity. It makes a lot of practical sense if you define your commodity here in a way that matches or aligns with your most useful and available data.

So, where can you find market data? Where can you find the technical definitions for the data? Generally, there are many good sources of publicly available commodity market data including the World Bank (WB), the International Monetary Fund (IMF), and the United Nation's Food and Agricultural Organization (FAO). These organizations are distinguished by their broad social mission to enhance human welfare throughout the world and for their non-profit structure. Because the United States is a major producer of agricultural commodities, several federal government agencies including the U.S. Geological Survey (USGS) and the U.S. Department of Agriculture (USDA) also publish useful global commodity market data. Most commodities also have in industry associations that, while sometimes legally structured as a non-profit organizations, they typically have far narrower public missions, usually to advance the unique interests of those who grow or produce the particular commodity.  Examples include the International Aluminum Institute and the World Steel Association. These organizations typically have some limited data available to the public and then charge fees to members for more detailed reports. Finally, there are many for-profit consultancies that gather original data and prepare market forecasts for a fee. For example, MarketResearch publishes proprietary reports from about 250 market research firms covering a wide variety of topics, including food and beverages. Single copies of these marketing reports cost between a few hundred to thousands of dollars.

Use the Data Appendix. Don't worry if this is your first time looking at commodity market data like this. The data appendix in this text provides helpful guidance on how to find market quantity and price data for more than 30 globally traded commodities. Click on the link to access the data appendix and then follow the instructions to the market quantity data (and later the price data) for your commodity. There are also instructions how to find the commodity specifications for the data. Again, there are great practical reasons why you should adopt the commodity specifications from the existing data as the specification for the purposes of your analysis.

FINDING DATA VIDEO, MILK EXAMPLE (8:43)

FINDING DATA VIDEO, MAIZE EXAMPLE (9:14)

Use the Definition Used for the Quantity Data. You might notice that the data appendix has instructions for finding market price data and market quantity data. Which specification--the one for the price data or the quantity data--should you use to define the commodity? Usually you should specification that aligns with the market quantity data. The commodity specifications for the market price data are different (i.e., more specific) than the commodity specifications for the market quantity data. The definitions of products used to estimate the market price for a commodity are typically very specific.2 The definitions used for market quantity estimates are typically more encompassing and inclusive, for example, of all or most of the different established commodity grades. For your market definition and for the purposes of your analysis, you will likely use the more encompassing definition that is associated with the market quantity estimate. 

Ensure Definition Matches Global Market Segment.  Most often your commodity will have good data available for the level of the marketing chain that you are are analyzing.  Most commodities have one specification no matter the distance transported. But, what if the best available market quantity data you can find uses a commodity specification that does not align with global segment of the marketing chain (i.e., the segment you are analyzing)? What do you do then?

Most globally traded commodities have the same form and specifications regardless of the shipping distance. These commodities usually have at least one of two (and sometimes both) characteristics. These commodities have relatively (1) high value density and/or (2) low chances of spoilage. 

Gold is a commodity that has relatively high value density (i.e., high value relative to the product's physical size/weight). Gold ore is mined and typically processed locally at or near the mine sites into gold bars of standard sizes and purities. These bars are used to transport the product both short and long distances. The same is true of most other precious metals, all of which have relatively high value density. In the case of commodities with high value density, there is no need to transform the commodity (i.e., the gold bars) into any other form for transport to far away locations because the value of the gold bars relative to their size/weight is still quite high (i.e., it's "worth it"). In fact, gold and other precious metals have such high value density that they can be shipped cost effectively even via a very expensive options like on airplanes. 

Wheat is a commodity that has relatively low chances of spoilage. Wheat that is packaged properly can be stored for a relatively long time without refrigeration. This means that wheat and other similar commodities (e.g., soybeans, barley, corn, and cotton) can be shipped long distances (e.g., globally) using the cheapest transportation options like unrefrigerated barges. As a result, once these commodities are prepared for shipping, there is no economic motivation to transform the commodity based on the shipping distance. The cost to transport wheat and other similar commodities is relatively low enough that once these products are loaded, the marginal cost of shipping them nearer or farther distances is not a significant issue.      

Contrast that with commodities like milk, tomatoes, and most kinds of livestock. These commodities often have one or more different commodity specifications that vary based on (1) the marketing chain level being considered or (2) the distance the product is being transported. For example, the FAO gathers excellent global data for "raw milk" (i.e., the farm-level product). But, at the global level, milk is not usually exchanged in its raw or any kind of liquid form. Rather, for financial reasons, milk is typically exchanged at the global level in more processed forms such as dried milk, butter, or cheese. But the commodity market data for these products are not as robust or reported in the same usable format. In cases such as this, you should still define the commodity (e.g., "milk") using the specification associated with the best available data, but then clarify the situation. 

Here is some alternate prescribed language to use instead:

• For the purposes of estimating the current market quantity, I define ______[1]______ as ______[2]______. This technical definition is the same definition used by ______[3]______ which publishes the best global production data currently available. However, this analysis examines the global marketing level. At that level, this commodity often undergoes valued-added processing to make long-range global delivery more practical and economically feasible. Such processing includes transforming ______[4]______ into other commodities such as ______[5]______.

In the first blank [1], insert the name of the commodity. In the second blank [2], insert the specific technical definition that aligns with the best available global production (i.e., market quantity) data. In the third blank [3], insert the source of the market quantity data (e.g., FAO, USGS, or industry association) from the data appendix (see explanation above). In the fourth blank [4], insert the name of the commodity that you have data for (e.g., "raw milk"). In the fifth blank [5], insert the other more processed commodities that are more typically exchanged at the global market level.   

Include the Prescribed Figure. Note that your final paper and presentation must have a specific number of prescribed visual aids, including certain prescribed figures and tables. The first such prescribed figure is the one you used artistically for your title page. The second such prescribed figure accompanies this section of your paper. The prescribed figure that must accompany this section of your paper should show readers how your commodity looks. See the "Figures and Tables" section of the "Resources" chapter in this textbook for detailed instructions about how to select and format visual aids. Keep in mind that, as that section explains, you are expected to create your own figures, not merely cut-and-paste an existing figure from another report.  

Finally, remember that you need to convey understanding and detail sufficient to sustain and advance your credibility as an analyst. You do not have to be an expert on this subject. But, you will need to study carefully multiple sources of information. For additional guidance, see the "Credibility, Evidence, and Footnotes" section of the "Resources" chapter in the textbook.

2.5 Primary Producers

Insert a section heading (use bold text) titled "Primary Producers." In this section of your report, describe the general attributes or characteristics of the market's typical primary producing firms, including their important inputs and required technologies. This section should require three thoughtfully-composed paragraphs. You might have one paragraph each devoted to the attributes of typical firms, the important inputs, and the required technologies and then finish with a figure showing a photograph of a typical firm. In this section of your report, you must also include a properly crafted figure (i.e., "Figure 2") that shows readers a how a typical producing firm at the global market level looks.   

General Attributes. One goal of this section is to describe the general attributes of the typical primary producing firms in the market. Keep in mind that private and government-owned firms--not countries--produce goods and services. When talking in this section about the important primary producers, it is best where possible to identify both the firms that do the production and the countries where those firms operate. Often global commodity firms are multinational, operating in multiple different countries. 

Keep in mind too that you are analyzing a global commodity market, meaning that the producing firms typically look globally or at least internationally for consumers. Individual farmers and family farm partnerships that grow agricultural commodities like corn, soybeans, and wheat, for instance, do not themselves typically look across the entire globe to find prospective buyers. However, once these grains arrive at the grain elevators, the affiliated brokerage firms (e.g., Cargill, ADM, Bunge, etc.) look globally for buyers. So, the primary producers of these and other global agricultural commodities are often at the brokerage level (i.e., where brokerage firms are the suppliers). For global industrial commodities (e.g., gold, crude oil, and coal) are typically a little different (e.g.,  Exxon Mobil , Newmont Goldcorp, and Peabody Energy). The primary producers of global industrial commodities are at the extraction level of the marketing chain. They are often vertically integrated firms that do both the mining or drilling and also market these raw materials globally. Read the sections below on marketing chains and market space for more information about this distinction. 

Once you have identified the primary producers in your global commodity market, you want to identify what attributes or characteristics do those producing firms have in common. What are the distinguishing features of those firms as a group? How many employees? What are the hours of operation? What does it take to start production (e.g., are there large barriers to entry into this market)? Are all producers similar or is there great variety (e.g., in the size of operations)? If there is lots of variation, describe the range of variation.  

Again, the aim is to provide readers with sufficient context so that they can easily recognize or at least visualize a typical producer in this market and distinguish the typical producer from other similar, but non-typical producers. Evaluation criteria often help organize information and make arguments easier for others to understand. Evaluation criteria are the features of a thing that distinguish it from a similar but different thing. So, for example, biologists say that mammals typically have five distinguishing criteria. They have fur, are warm-blooded, most are born alive, the young are fed milk produced by the mother, and they have more complex brains than other animals. If you had a room full of different animals, you could ask someone to use this list of distinguishing criteria to evaluate which animals are mammals and which are not. In your report, similarly try to identify distinguishing criteria that your reader could use to evaluate whether any given firm is likely a primary producing firm in your market.  

Input Costs and Technologies. Another goal of this section is to describe the typical producers sufficiently so that the supply shifts that you identify in Part 2 of your analysis (i.e., your Market Forecast) make sense. The market forecast section has more details, but the five basic shift factors for supply are: 

1. A change in factor/input prices

2. A change in the level of technology or productivity

3. A change in the price of a good related in production

4. A change in the number of producers

5. A change in derived supply

The market supply curve shifts when, among other reasons, there is a change in the price of an input or factor of production (#1) in an upstream market or a change in the number of producers (#4) in the primary market. In this section of your report, you want to clarify what are the important costs of production for producers in your market, how many producers are in the market, and how are these producers similar and different from one another. Answers to these questions will provide helpful background information for your readers and listeners when you later analyze supply curve shift factors. For this section of your analysis, you should only focus only on the producers in the particular marketing chain level that you are analyzing (i.e., the primary market). Later, in the section on the marketing chain, you will consider the characteristics of major upstream and certainly downstream producers.  

Rather than simply making a list of important input or factor costs, you can often accomplish the same objective by talking instead about what a typical producer looks like. For example, if you are looking at a farm-level market, you might describe what a typical farm looks like. How many acres? How many animals? How many employees? Are typical farms in your market usually investor owned or family owned and operated? With this context established, you can then identify the major production costs (e.g., land, labor, capital, management). In some cases, demographic characteristics of typical producers might be relevant, including the age, race, or financial status. Be sure to point out where you think there are significant differences among producers (i.e., where these isn't a "typical" producer). 

Depending on the marketing chain level, major input costs might include rent expenses (e.g., for land or a store location), labor expenses, interest expenses (e.g., for machinery or business start-up costs), management expenses, and sometimes the costs of acquiring specific ingredients to create a good or, less often, service. Young animals, seeds, feed, fertilizer are sometimes significant input costs at the farm-level. Energy costs in general can be important costs of production at the farm-level  and especially the processor level of the marketing chain. Transportation costs can also be significant, especially at the distribution or wholesale level. For most firms, human input costs are relatively significant as well and include payments to front-line workers, managers, and technical experts (e.g., lawyers, accountants, lobbyists, scientists, and translators).    

2.6 Primary Consumers

Insert a section heading (use bold text) titled "Primary Consumers." In this section of your report, describe the general attributes or characteristics of the market's typical primary consumers. Be aware that the consumers in the global commodity market are likely to be large firms, not individual retail consumers. This section should be relatively short or about one thoughtfully-composed paragraph. 

As in the previous section, the goal of this section is to describe the typical consumers in your market--the primary market--sufficiently so that readers have some basis for understanding the demand shifts that you will identify later in the market forecast part of your report. There are five basic shift factors for demand:

1. A change in consumer incomes

2. A change in the price of a good related in consumption

3. A change in consumer tastes and preferences

4. A change in the number of consumers

5. A change in derived demand

Most notably the market demand curve shifts when there is a change in consumer incomes (#1), a change in consumer tastes and preferences (#3), a change in the number of consumers (#4), and a change in derived demand (#5). So, for example, if the incomes (or profits) change for the firms that are buying wheat, soybeans, gold, coal, or oil, that will shift the demand curves in those markets. Or, if those buying firms experience a change in tastes and preferences (e.g., an international food company that wants to expand its soy-based product line), then that too will shift the demand curve in the primary market (in this case for soybeans). Or, if the number of firms that buy these global commodities from the producing firms changes, that will also shift the demand curves in those markets. 

Keep in mind that these market changes can occur in any market along the marketing chain; the global global commodity market that you are analyzing is just one market in a chain of related markets. In a global commodity market like the one you are analyzing, it is likely that the producers are the brokers and dealers (if you are analyzing the market for an agricultural commodity) or the extraction and marketing firms (if you are analyzing the market for an industrial commodity). In this section of your analysis, you want to describe the attributes of the firms that typically buy from the producing firms in your market. That set of primary buyers and that set of primary sellers make up the global commodity market you are analyzing (i.e., your primary market). More information about marketing chains and the other markets that are upstream and downstream from your primary market is in the section that follows.  

When there are changes in one of these demand shift factors in your market (i.e., the primary market; i.e., the market you are analyzing), those changes will affect the demand in all upstream markets in a derived fashion. That means, for example, that if the demand increases for frozen soy-based food items at retail grocery stores (i.e., the retail market), that change at the retail level will flow upstream and increase the demand at the processor level (e.g., for soybean processing), at the level of certain global commodity brokerage markets (e.g., for soybeans), and of course at certain farm-level markets (e.g., for growing soybeans).      

In this section of your report, you want to clarify how many consumers or consuming firms are in your market approximately, what are their incomes (or profits), and what are their tastes and preference (e.g., for other substitute goods and services). 

Answers to these questions will provide helpful background information for your readers and listeners when you analyze demand curve shift factors. For this section of your analysis, you should only focus on the typical attributes of the consumers or consuming firms in the particular marketing chain level that you are analyzing. In the next section on the marketing chain you will consider the characteristics of upstream and downstream consumers.

2.7 Marketing Chain

Insert a section heading (use bold text) titled "Marketing Chain." In this section of your report, identify the primary producers and consumers at the global market level and distinguish that market from the other major upstream and downstream components of the marketing chain as the raw commodity gets transformed through the marketing chain into various intermediate, wholesale, and retail products. Identify the most typical upstream and downstream products and define any relevant demographic, income, or educational characteristics of consumers in the major downstream retail markets. This section should require one or two thoughtfully-composed paragraphs. In this section of your report, you must also include a properly crafted figure (i.e., "Figure 3") identifying the global market (i.e., the marketing chain segment where global sellers and global consumers interact) and showing the main upstream and downstream marketing channel components.

A marketing chain is a series of value-added stages that a product or less often a service goes through from initial through final production. The marketing chain is sometimes called the 'supply chain', the 'marketing channel', or the 'value chain'. Many products and some services are marketed multiple times in various stages from raw production (e.g., at the farm or resource extraction level), through intermediate processing and assembly (e.g., at the processor level), to bulk storage and distribution (e.g., at the wholesale level), and then to final packaging and showcasing (e.g., at the retail level). Economists typically talk about products moving 'downstream' through this value-added marketing channel like water flowing down a mountain (Figure 2A). The figure you create for your report must be specific to your commodity and must clearly identify the global commodity market section of the supply chain, for example, as showing in Figure 2B. 

Since each of these downstream marketing levels involves interaction among different groups of producers and consumers, different product characteristics, and different product prices, each level is a separate market. Analysts must clarify the level of the marketing chain they are analyzing when the product or service under analysis is exchanged at more than one marketing level. For example, retail markets for most food items (e.g., watermelons) differ from their wholesale and farm level counterparts. Likewise, the producers and consumers of gold at the retail level (e.g., where gold jewelry is exchanged) differs from the producer and consumer firms that operate at the extraction level in the global commodity market for gold (i.e.., where gold ore is mined and exchanged). 

In this section of your report, you have one goal. You want to clarify further who the typical primary producers and consumers are in the primary market you are analyzing by distinguishing them from the typical producers and consumers who operate in other segments of the marketing chain, either in upstream or downstream markets. Remember that you are analyzing a global commodity market. A global commodity market is more complex than what is depicted in Figure 2A. The figure you create to put into your paper needs to identify the international portion of marketing chain (e.g., Figure 2B). That means that your figure should show where in the marketing chain are the primary producers in the international market who are looking globally to find and sell the commodity (i.e., the primary producers in your market). And, your figure should show where in the marketing chain are the consumers who are looking globally to find and buy the commodity (i.e., the primary consumers in your market). It is likely that you will have to create your own figure (e.g., using text boxes, images, arrows, etc.).   

The reason you want your readers to understand this distinction between your primary market (i.e., your primary consumers and producers) and the related upstream and downstream markets is because changes in consumer demand characteristics (e.g., changes in income, preferences, and population) in the downstream markets and changes in producer characteristics (e.g., changes number of producers or in producer input costs) in the upstream markets affect the primary market (i.e., the market you are analyzing). In this section, you do not need to explain how or why such impacts occur; you will explain how in the market forecast section of your analysis. Here, in this section, you only need to mention that such changes occur, namely that consumer changes in the downstream markets and producer changes in the upstream markets affect the primary market. You can only really make this point clearly after you have distinguished these other upstream and downstream markets from the market you are analyzing. You need to describe the upstream and downstream markets and clearly distinguish them from the primary market you are analyzing so that later, when you analyze expected future shifts in supply and demand throughout the marketing chain, your reader will better understand how changes in those upstream and downstream markets can and do affect supply and demand in your primary market. 

Typically, marketing levels are defined with reference to who the producers are. For example, markets (e.g., fresh heirloom tomatoes) that involve farmers as producers and wholesalers as consumers are defined as "farm level" markets since farmers are the producers. Markets that involve wholesalers as producers (e.g., boxed and cleaned fresh heirloom tomatoes) and grocery stores as consumers (e.g., Whole Foods) are defined as "wholesale" market since the wholesalers are the producers. Similarly, "retail" market are ones where retailer stores (e.g., grocery stores) produce and sell fresh heirloom tomatoes (e.g., by placing them at eye level on store shelves in air conditioned buildings) to college students, parents, and other regular consumers. Global commodity markets for agricultural products usually start at the 'farm' level where farmers are the producers. For global industrial commodities (e.g., gold, crude oil, and coal), we sometimes say that the marketing chain starts upstream at the 'extraction' level where mining or drilling firms are the producers.

Typical marketing chains for most products start with a farm-level or extraction-level market and moves through one or more processor level markets then one or more wholesale level markets and finally to various retail level markets. There are some atypical marketing chains. Most products and a few services can be marketed in a vast number of specialized ways that defy typical characterization. 

The analyst's job is to define the distinct marketing situation using the most informative words possible. Domestic wholesale markets usually differ (e.g., prices and packaging) from export wholesale markets. Private markets (e.g., for Thoroughbred horses) differ public auction markets (e.g., at Keeneland). In some livestock markets, animals (e.g., cattle) are purchased and bundled into larger lots by dealers, creating "dealer markets" for these products with dealers (as producers) and finishing yards or processing plants (as consumers). For these examples, you could have "export markets", "private markets", "auction markets", and "dealer markets", respectively.

While uncommon for global commodities, it is also possible for more niche products to utilize direct marketing, similar to the way services are directly marketed to consumers. This is particularly and increasingly common for agricultural products. For example, corn or maize is typically sold to retail consumers by retail grocery stores who receive the product from wholesale distributor who receive the product from farmers. But consumers at most farmers' markets buy corn directly from farmers. This market could be described, for example, as the 'farm-direct' market.      

2.8 Analytical Time Period

Insert a section heading (use bold text) titled "Analytical Time Period." The analytical time period defines the length of time during which you will consider market activities (e.g., supply and demand shifts) that affect market price and quantity. In this section, you must specific the start and end points (e.g., calendar years) for the analytical time period and describe the rationale for that time period versus some other. This section should be about one paragraph.

All or nearly all of the analytical time period must be in the future. The analytical time period for current analyses typically begins with the present year or another recent year for which you have good market price and quantity data. Sometimes a current market analyst may choose one year (or period) prior if data for the prior year (or period) is more accurate and/or available. Also remember, a current market analysis focuses on the direction and magnitude of change from an initial set of market conditions (e.g., P1 and Q1) over some period of time into the future. Thus, your choice of analytical time period depends in part on how far into the future you need or want to predict these changes. For instance, many commercial bank loans or capital investments for businesses have a five year payback period. Lenders often require businesses as part of their requests to predict what will happen in the market over the period of the loan (i.e., over a five year period).

There are trade-offs involved in selecting/defining an analytical time period. Predicting the future becomes more difficult the farther into the future one looks. But, choosing a relatively short analytical time period means that the useful lifespan of the analysis ends relatively soon. 

In general, a five- to 15-year time period is good for analyses that seek to predict the future (i.e., current market analyses). This period of time is typically long enough that the usefulness of the analysis does not expire too soon but short enough that market predictions are still relatively accurate. 

For your analysis, you must choose an analytical time period of at least five calendar years but no more than 15 calendar years. A key rationale for you to consider and make in your report is how well the analytical time period you select appropriately balances the useful lifespan of your analysis with the complexities of market forecasting.

The first year of your analytical time period should be the calendar year for which you have useful market price and quantity data. For example, if you have useful data for 2023, then a five-year analysis would be styled as "2023 to 2028" and a 15-year analysis would be styled as "2023 to 2038".

2.9 Global Production Areas

Insert a section heading (use bold text) titled "Global Production Areas." In this section, you must provide a description of your commodity's important global production areas. This should require one or two paragraphs. You also need to create an original figure (i.e., "Figure 4") that depicts (e.g., using a global map) this information. Look online for mapping tools (e.g., MapChart) to help you create an original, useful, informative, and attractive map. 

Keep in mind, as noted in the section above on Primary Producers, that private and government-owned firms--not countries--produce goods and services. When talking in your report about important production areas, it is best where possible to identify both the firms that do the production and the countries where those firms operate.  Remember, you can find guidance on how to create useful figures in the Figures and Tables section of the Resources chapter of this text. 

2.10 Market Space

Insert a section heading (use bold text) titled "Market Space." In this section, you need to provide a rationale for why the commodity's market space is global and a description of the commodity's important global production areas. Your rationale should be about one to three paragraphs, and your description of the important production areas should be one to two paragraphs. 

Market Space Concept. A market's spatial boundary is the geographic space across which consumers and producers of that product or service typically interact. Markets typically have geographic centers where these interactions occur most regularly and then, beyond these acknowledged centers, the periphery usually fades toward relatively unclear boundaries. The goal of this section of your report is to define the market's spatial boundaries as objectively and reasonably as possible while appropriately acknowledging that uncertainties may exist, especially at the periphery.

For example, how far do retail producers of whole, fresh, never frozen snapper (a type of fish) look to find consumers? A typical producer of this retail product might be Whole Foods, a specialty grocery store chain. What is the likely market space for this retail product? One way to think about this question is to think how far retail producers advertise this product in the local newspaper. To which home addresses (i.e., how far away) does the retail store (e.g., Whole Foods) contract to send their promotional fliers? You could probably ask the store manager. Or, you could ask typical consumers how far they would be willing to (or did) travel to find a price for this product that is acceptable to them (e.g., how far away are consumers willing to look to compare prices)? A quick look at the license plates of vehicles in the store parking lot (most show county and state origins) may offer some evidence of how far consumers travel to get to the a particular retail producer of this product. As you might guess, the market space for retail production of whole, fresh, never frozen snapper is likely to be "local" or many "regional," depending on how one might define those terms.

But, you have been assigned to analyze a market for a globally-traded commodity. That means by definition that the market space for your product at your assigned level of analysis is global. Consider a few more examples.

Think about farmers that grow agricultural commodities like corn, soybeans, and wheat. These farmers do not themselves typically look across the entire globe to find prospective buyers. Instead, at the level of the individual farmer, the market is probably regional, meaning one or several counties in size. In other words, at the level where the individual farmer is the supplier and the regional grain elevator is the buyer, the market space is probably appropriately described as "regional," meaning one or maybe several counties in size. That means that the geographic space across which individual farmers of corn, soybeans, and wheat look for buyers is typically across one or maybe several counties (i.e., however far it is to the nearest or most price competitive grain elevator). Likewise, the farthest that a regional grain elevator operator would typically look to find a potential supplier (i.e., individual grain farmer) would be about the same distance (i.e., across one or maybe several counties).

Thus, farm level markets for most grains are local or regional markets depending on how an analyst might define those two terms. And, because those markets are local or regional, it also means that there must be (and are) many, many different local and regional farm level grain markets across a country like the United States. For example, there are separate regional farm level grain markets around the nearby cities of Cairo (Illinois), Paducah (Kentucky), and Cape Girardeau (Missouri).     

However, once the grain arrives at the grain elevators, the affiliated brokerage firms (e.g., Cargill, ADM, Bunge, etc.) look globally for buyers. So, at the brokerage level (i.e., where brokerage firms are the suppliers), the markets for corn, soybeans, wheat and most other agricultural commodities are global. For most industrial commodities (e.g., crude oil, gold, and coal), producing firms (e.g.,  Exxon Mobil , Newmont Goldcorp, and Peabody Energy) tend to be more vertically integrated, meaning that these firms control both local extraction activities (equivalent to individual local farmers) and global distribution and trade of the mined products (equivalent to agricultural brokerage firms).  

Factors Affecting Market Space. There are three basic factors that determine the spatial boundaries of a market. The spatial area determinants are: (1) transportation costs, (2) government regulations, and (3) the distribution of producers. It is likely that the commodity market that you analyze for this assignment is a global market. Your task is to find and present supporting evidence of that claim based on your commodity's global transportation costs, government regulations, and the distribution of producers.   

Transportation costs are usually the single most important factor affecting a market's boundaries. Lower transportation costs entice producers and consumers to look greater distances to find one another. Transportation costs include both the physical cost of moving goods, services, or consumers from one location to another, and also the time cost. Transportation costs tend to be relatively lower for products that are less perishable and that have higher value and higher density (i.e., high value per unit of weight or volume). Goods that have relatively low value and low density (i.e., low value per unit of weight or volume) have relatively high transportation costs and therefore relatively smaller marketing areas. Goods that have relatively high value and high density (i.e., high value per unit of weight or volume) have relatively low transportation costs and therefore relatively larger marketing areas.   

For example, compare the transportation costs for watermelons (fresh perishable fruit, low value per unit weigh/volume, i.e., low value density) versus saffron (dried spice, not perishable, high value per unit weight/volume, i.e., high value density). Fresh seeded watermelons are relatively costly to transport (e.g., perishable fruit, requires temperature control, low value density) given their value (i.e., $0.47/pound, retail, national average, 2015).3 For this reason, the market boundaries for this product at the wholesale level are probably regional (e.g., multi-state). By comparison, the relatively high value density of Afghan saffron ($909/pound, retail, 2015) easily makes this product cost-effective to ship globally at the wholesale level, assuming that food safety and tariff regulations are not prohibitive.4

Government regulations also matter. International agreements, federal laws, and state laws restrict and sometimes prohibit cross-border trade of certain products (e.g., endangered species and some recreational/medical drugs). Other laws and regulations impose cross-border trade tariffs (i.e., taxes) or quotas (i.e., quantity limits) that make market prices different in export markets versus domestic markets. Trade restrictions can be for security reasons (e.g., food safety) or in retaliation for another country's unfair trade policies. 

Likewise, regulations or the lack of regulations can also play a role even if there are not outright trade prohibitions. For example, the market for Afghan saffron might not be a global market (see example above) if global consumers have concerns about the safety or integrity of the product. If Afghan food safety or farming regulations (e.g., regarding the use of pesticides) do not satisfy the needs of global consumers, the market for Afghan saffron might be merely a national or maybe even non-existent market even though the transportation costs might otherwise suggest a much larger (e.g., global) market.

Service markets can also be affected by regulations, particularly local zoning regulations. Some service activities (e.g., tourism-based activities that attract large numbers of consumers) may be prohibited in certain rural, agricultural areas. For example, local zoning regulations in Fayette County, Kentucky prohibited a zip-line and canopy tour operator from opening in that county until the operator obtained a variance from those regulations.3 

The distribution of producers is also a factor affecting the market space. As noted, transportation costs affect how far consumers look to find producers. When producers of similar or equivalent products are more uniformly distributed across a geographic space (e.g., retail grocery stores across town), consumers generally do not need to travel as far to purchase a product or service compared to if the producers were more concentrated spatially (e.g., in a city center). For this reason, most retail markets for lower-value, non-specialty, and especially perishable products (e.g., basic grocery items) are local markets. Market producers of these products are often housed in so-called "brick-and-mortar" stores. The spatial marketing areas for some products (e.g., retail gasoline, low-cost take-out food, grocery staples) can be as small as a few blocks in a large, densely populated city. This is because consumers of these products in large cities do not typically need to travel any further than this very localized area to consume these goods. Consumers in these markets are not willing to drive (or walk) more than this short distance to fill their cars with gasoline, grab a bite to eat, or restock their refrigerators with milk.

Online retail producers (e.g., Amazon, Alibaba, Walmart) increasingly push the market boundaries wider for more and more retail products by offering products online with competitively priced shipping to consumers' homes or to centralized pick-up locations. The same is true for an increasing number of services that traditionally have been almost exclusively local markets (e.g., basic legal services are now available online via Legal Zoom and similar sites). As online shopping experiences increasingly match traditional, brick-and-mortar experiences (e.g., free, same-day shipping with free, no-hassle returns), the market boundaries for products and services at these outlets will continue to expand.

2.11 Exchange, Valuation, and Transportation

Insert a section heading (use bold text) titled "Exchange, Valuation, and Transportation." In this section, you have three tasks. One, describe how the commodity is typically exchanged, transported, and stored. Two, describe the typical levels of spoilage or degradation, if any, that occur during the usual exchange process. Third, describe the units that producers and consumers use when they value and exchange the commodity. This section should require about two thoughtfully-composed paragraphs. This section should also include one properly-formatted figure (i.e., "Figure 5") that shows one unit of exchange for the commodity.  

The unit of exchange is simply an objective unit for measuring the transfer amount, (i.e., how much of a good or service is transferred from producers to consumers). The unit of exchange for most commodities is measured as a volume or weight. In many cases, this objective unit of exchange will be standardized for the industry at the global marketing level. For example, the pound, kilogram, ton, or metric ton are standard measures of output quantity for most fresh fruit and vegetable markets. The bushel or ton are used typically for grains (corn and soybeans). Cotton is often marketed by the bale or metric ton. The cord and board foot are used for firewood and lumber, respectively. The gallon or liter is typically used for liquid unit measures. Some services can be measured in hours of work (e.g., plumbing, electrical, or lawn mowing work) or by the job (e.g., number of devices installed or acres of field mowed). 

Like the unit of exchange, the unit of valuation must be defined clearly. The unit of valuation is simply an objective unit for measuring the value of one unit of exchange. For nearly all global commodity markets, the medium of exchange is the U.S. dollar (USD).  The USD is sometimes called a "reserve currency" since it is a currency that many governments and global firms keep in reserve to facilitate international exchange. For many decades, the USD has been the dominant global reserve currency, but increasingly the Euro and Chinese Yuan are considered reserve currencies. If uncontroversial, you may simply specify the unit of valuation in as little as a single sentence (e.g., "The unit of valuation for this market is the U.S. dollar") placed in a footnote stating the same information as part of another paragraph.

2.12 Current Market Equilibrium

Insert a section heading (use bold text) titled "Current Market Equilibrium." In this section, you need to describe the market's current equilibrium price and quantity. This section should require about one thoughtfully-composed paragraph. This section should also include one properly-formatted figure (i.e., "Figure 6") that shows the current market equilibrium for the commodity. The time period that is "current" is whatever common period (usually a calendar year) for which you have market price and quantity data. See this data appendix.    

Market Quantity. The market's equilibrium quantity is the total number of units produced and sold by all producers in the market area during a given time. This is the same number of units that are bought and consumed by all consumers in the market area during the same time period. Recall that in the "Commodity Characteristics" section above I prescribed that you define your commodity for the purposes of your analysis using the same commodity specifications that are used for your market quantity data. If you did this as prescribed, then the task of estimating or identifying the current market quantity will be simple. You simply refer to the market quantity using the same commodity specification as are used by the recommended data source given in this data appendix.      

Be sure to note the calendar year for the quantity estimate you have selected. The calendar year that you specify as the start year for your analysis should be the same calendar year for which you have useable market quantity and price data. Look back at the start year you used in your purpose statement and methods statement paragraphs. You might need to change the start date and end dates that you specified in those paragraphs. The start year for the analytical time period that you propose must be the same calendar year that you use for your market price and quantity data. The end date for your analytical time period is usually either five, ten, or 15 years after the starting year. For this assignment, the period of analysis cannot be less than five years or more than 15 years. 

Also, keep in mind that it is impossible to estimate or specify the market equilibrium quantity that is exchanged between producers and consumers without also specifying the time period over which this quantity is exchanged. For example, the unit of exchange in the current local retail market for home-baked, locally-produced dog biscuits is probably "pounds". It is meaningless to say, for instance, that the market quantity is 8,500 pounds. You must express market quantity as the number of units exchanged (e.g., "pounds of dog biscuits") in the market area during a given time period (e.g., "per year"). Typically, this time period is one year (i.e., 12 months) since it captures all of the seasonal effects that often affect production and consumption choices, particularly in food and agricultural markets. The time period for reporting market quantity may be shorter (e.g., "pounds per month") if the analytical time period you are analyzing is less than five years (e.g., one or two years). 

Market Price. The market's equilibrium price is the price of one unit of exchange during or at a given time. Since the market price is also the equilibrium price, it is the price that consumers in the market are willing and able to pay for one unit of exchange which is also the price that producers in the market are willing and able to charge for one unit of exchange. 

Market analysts including those at the International Monetary Fund (IMF) typically select one specific or a combination of several specific grades or versions of a commodity to use as a proxy for the market price of all of the grades and versions of that commodity. The word proxy here means 'to represent the value of something else in a calculation.' These analysts use a proxy price (i.e., a representative price) because the only prices that typically exist are prices for each specific grade or version of the commodity. Buyers and sellers do not, for instance, trade "cotton". They only trade specific kinds or grades of cotton. Analysts can easily observe the prices for each of those specific kinds or grades, but there is no where to look to observe the price of the aggregate commodity. For this reason, the organizations that analyze markets (e.g., the IMF) identify the price of one specific grade or version (or sometimes a combination--e.g., an average--of the prices for several grades and versions) and say that that price will serve as a proxy for (or will represent) the the prices of all of the grades and versions of that commodity. 

In your analysis, you face the same problem. You need a proxy price too. For the same reasons you elected to define the commodity characteristics in the same way as was used for the market quantity data, you now want to find a proxy price for your commodity that is used by other experts (e.g., analysts at the IMF or other globally relevant organizations). To do this, simply use the same market price proxy for your commodity as the one described in this data appendix.      

Be sure to note the calendar year for that most recent actual price. The calendar year that you use as the start year for your analytical time period should be the next calendar year after the calendar year you use for your price estimate. As noted above, the calendar year that you use for your market price estimate must be the same calendar year that you use for your market quantity estimate. If the years do not match, you will have to find the most recent calendar year with both quantity and price data. Once you have the most recently published quantity and price data, you need to look back at the start and ending years that you used in your purpose statement and methods statement paragraphs. You might need to change those dates. The end date of your analytical time period should be either five, ten, or 15 years after the start date. For this assignment, the period of analysis cannot be less than five years or more than 15 years. 

Market Equilibrium. To identify the market equilibrium, you must make sure that the unit of exchange (e.g., metric tons per year) uses the same weight, volume, or size for the unit of valuation (e.g., dollars per metric ton). In some cases, you may need to convert one or the other so they match. For example, suppose the current market quantity is 25,516 metric tons of silver per year and the current market price is $20.54 US dollars per troy ounce. If so, you  will need to convert the unit of exchange or the unit of weight, volume, or size for the unit of valuation. Since there are 32,150.7 troy ounces in one metric ton, you can multiply the $20.54 price for one troy ounce by 32,150.7 troy ounces to get the price for one metric ton of silver (i.e., US$660,375). See Figure 3A. Alternatively, as shown in Figure 3B, you could equivalently divide the units of valuation and exchange by 1,000 to convert the quantity exchanged from metric tons to kilograms (kg). To avoid having a long number with many zeros for the market quantity (i.e., 25,516,000), you can shorten this number (e.g., 25.5 million).  

Once you have the unit of exchange and the period of time (e.g., metric tons per year) and a unit of valuation (e.g., dollars per metric ton) and once you have the current market quantity and current market price, you are ready to create the prescribed figure showing the current market equilibrium (Figure 3A and Figure 3B). For instructions about how to create line graphs using Microsoft Word, see the Figures and Tables section of the Resources chapter of this textbook. 

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1. USDA. Agricultural Marketing Service. 2015. "National Retail Report--Fruits and Vegetables." Volume IX, No. 31. Accessed: 8-8-15 at http://www.ams.usda.gov/mnreports/fvwretail.pdf. This national marketing report is published weekly by the U.S. government. To locate the report, visit https://www.marketnews.usda.gov/mnp/fv-home and look for "National Retail Report--Fruits and Vegetables" under "Popular Reports". For similar data about other agricultural commodities, visit the Agricultural Marketing Service of the USDA at http://www.ams.usda.gov/.

2. For instance, the World Bank in 2021 defines "cotton" using the Cotton Outlook (i.e., "Cotlook") 'A' price for "middling 1-3/32 inch" cotton "traded in Far East" specifically at the Naphtha C&F Japan trading hub. Again, this is the more specific commodity definition that is used to measure market price. 

3. World Bank. 2015. "Saffron: A Major Source of Income and an Alternative to Poppy." Accessed: 8-8-15 at http://www.worldbank.org/en/news/feature/2015/01/20/saffron-major-source-income-alternative-poppy.

4. Musgrave, Beth. 30 October 2016. "Controversial Fayette County Zipline Operation Finally Gets Green Light." Lexington Herald-Leader. Accessed: 1/24/2018. http://www.kentucky.com/news/local/counties/fayette-county/article111115322.html