University of Arkansas, Fayetteville


Rice is a predominant food staple in many regions of the world, and it is important to determine how efficiently the U.S. rice market helps to ensure world food security. This question can be answered by gauging the price discovery performance of the U.S. rice futures market and the economic usefulness of the U.S. government’s supply and demand forecasts. So, to this end, we employ two event study approaches: (1) to examine variability in returns on report-release days as compared to returns on pre- and post-report days, and (2) to regress price reactions on changes in usage and production information. It is found that the USDA provides the rice futures markets with valuable information and rice futures respond to the information in an economically consistent manner.