It’s quite easy to research the cost of creating a rice farm, or a power plant, as well as get a tight bounded probability distribution for the expected price you can sell your rice or electricity at after making the initial investment. These markets are very mature and there’s unlikely to be wild swings or unexpected innovations that significantly change the market.
This doesn’t affect your overall article much, but it’s worth noting that commodity prices can be very volatile. Looking up the generic rice contract on Bloomberg for example, and picking the more extreme years but the same month (to avoid seasonality):
1998 April: 10.2
2002 April: 3.6
2004 April: 11.3
2005 April 7.2
2008 April: 23.8
2010 April: 12.6
2013 April: 15.8
2015 April: 10.0
You do have the ability to lock in the current implied profitability using futures, but in general commodity markets seem to be more volatile than non-commodity markets.
This doesn’t affect your overall article much, but it’s worth noting that commodity prices can be very volatile. Looking up the generic rice contract on Bloomberg for example, and picking the more extreme years but the same month (to avoid seasonality):
1998 April: 10.2
2002 April: 3.6
2004 April: 11.3
2005 April 7.2
2008 April: 23.8
2010 April: 12.6
2013 April: 15.8
2015 April: 10.0
You do have the ability to lock in the current implied profitability using futures, but in general commodity markets seem to be more volatile than non-commodity markets.
Interesting, thanks!
Edit: I’ve now updated the post.