Market and price analysis (Report) SELECTED COMMODITY = DIARY AUSTRALIAN INDUSTRY Part A. Write a short term outlook (approximately for 3 years past the data you find) for your selected commodity....

Part A:
Australian dairy industry: an overview
Dairy Industry has made an important contribution to Australian economy. It is the third largest agricultural industry with a worth of $4 billion annually. Australia is one of the largest exporters of dairy products. The dairy industry also plays a crucial role in employment generation of the economy. Australis produces a range of products that includes milk, milk powders, butter, cheese and yoghurt. Deregulation occurs in the year 2000 and since deregulation the price received by the farmers for milk is completely controlled by the free market. We are currently focusing on domestic fresh milk market for our production. (pwc, 2011)
Scatter graph of milk price time series data (weighted average)
The above graph shows the scatter plot of time series data for milk price (weighted average) in Australia. We have measured the milk price along Y axis and time along X axis. The data is collected from the ABARES website. (ABARES, 2017).
We have collected the data since 1973. So the number of observations are 44.
Linear trend line:
A linear trend line can be derived from the scatter plot that is also shown in the above graph. The equation for the trend line is
Here y is the dependent variable representing price of the milk
X is the independent variable representing time
8.0689 is the intercept of trend line.
The slope of the trend line is +0.8655, that shows how the milk prices changes in every year.
The equation confirms the positive relation between the two variables: it implies weighted average of milk price increases over time.
The value of R^2 for the estimated trend line is 0.8982. This shows 89.82 % of the total variation is explained through the estimated line.
Predictions of milk price for coming three years:
The future milk price can be predicted from the estimated trendline. Let us predict the milk price for next three years, 2019, 2020 and 2021. In other words we have to figure out the price of milk (y) for next three time periods ( T= 45,46 and 47)
The scatter plot clearly indicates the volatility of milk price. We have observed significant ups and down over the years. The milk price is complex and depends on both demand side and supply side factors. During the recent times, the dairy industry is facing huge challenges. The dairy farmers are struggling to survive in the market due to continuous rice cut- the new milk price has even gone down below the cost of...