Forecasting the red lentils commodity market price using SARIMA models
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Forecasting the red lentils commodity market price using SARIMA models Roshani W. Divisekara1 · G. J. M. S. R. Jayasinghe2 · K. W. S. N. Kumari2 Received: 27 July 2020 / Accepted: 25 October 2020 © Springer Nature Switzerland AG 2020
Abstract Canada is the world’s largest producer of lentils, accounting for 32.8% of total production in the world. However, the production of lentils are prone to fluctuate due to the impact of erratic factors such as weather conditions and economic crises. Consequently, the price of the commodity will be changed and volatile. Therefore, the approach of modeling and forecasting future price based on the preceding data will provide representative figures to make decisions regarding the lentil production for growers and end users. Hence, the objective of this study is to model and forecast the red lentil prices using the Seasonal Autoregressive Integrated Moving Average model (SARIMA). Eight years of weekly data starting from 2010 to 2019 which comprise 521 observations, obtained from Saskatchewan.ca were used in this study. The average red lentil price in Saskatchewan was dollar 24.75 per 100 lb, and weekly prices were highly fluctuating over time. The seasonality and volatility of red lentils are modeled and forecasted by calculating the seasonal index and applying SARIMA models to the time series. The results reveal that the SARIMA (2,1,2) (0,1,1)[52] model provides the best in sample and out-sample performance when predicting the red lentil prices. Hence, this model can be utilized by both growers and end users in making optimal production decisions and in managing overall price risk. Keywords Forecasting · Lentils · Model · SARIMA · Seasonal index
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s4354 6-020-00020-x) contains supplementary material, which is available to authorized users. * K. W. S. N. Kumari [email protected] 1
Postgraduate Institute of Science, University of Peradeniya, Peradeniya, Sri Lanka
2
Department of Science and Technology, Faculty of Applied Sciences, Uva Wellassa University, Badulla, Sri Lanka
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Introduction Humans consume protein in different procedures, including animal sources as meat and plant sources as pulses (Lakkakula et al. 2017). Particularly, lentils are a rich source of Protein, Carbohydrates, Fiber, etc. Further, one major benefit of pulse consumption over meat consumption is that pulses contain only tiny amounts of fat compared to meat. Moreover, lentils also can be used for livestock feed. Table 1 shows the nutrition value of 100 g of lentils. Lentils contain a greater amount of protein and carbohydrates, whereas Fat content is low in lentils. Table 2 exhibits the essential micronutrients and vitamin B9 for each 100 g of lentils. Lentils comprise higher amounts of Iron, Phosphorus, and Copper. Canada is the major producer and exporter of lentils in the world as they export approximately 2.03 million metric tons of
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