220.127.116.11 Step 2: Characterizing price relationships across commodities in the same market
The insights that come from the analysis of price behavior in this market for one or many
commodities under different conditions. These conditions include different types of
harvests (good, poor, and average), changes in consumption and marketing patterns, and
policy and macroeconomic shocks. In addition, this analysis will assist in understanding the
relationship between the commodities. For example, this analysis will provide an indication
if commodities are substitutes or complements.
An example of the output from this analytical step illustrates the historical behavior of millet
and white sorghum prices at the market in Abeche, Chad over the period of 1990 to 1997
(Figure 5.3). A period of many years was selected to provide a historical perspective of the
price behavior of millet and white sorghum for that market.
Figure 5.3. Example of the examination price relationships across commodities in the
A comparison of millet and white sorghum prices in
Abeche, Chad (1990 to 1997)
The behavior of millet and white sorghum prices in this market, with a few exceptions,
illustrates an identifiable pattern. After the harvest, prices normally increase throughout the
agricultural season until they peak in either May or June. This rise in prices reflects either
an increase in demand or a decrease in supply. The peak in millet and white sorghum prices
usually occurs in advance of the harvest, implying that traders are providing an early
indication of the quality of the millet and white sorghum harvest prospects. Normally millet
and white sorghum prices in this market decline after the peak until the harvest has been
completed (December or January).
The behavior of millet and sorghum prices in this market generally follows this pattern.
Still, there are some interesting departures from this pattern. For example, the price of both