I grains consumption. The imports of grains is a government monopoly, carried out by an autonomous agency connected to the Ministry of Commerce and Industry. Twelve-month forecasts of consumption and domestic production, routinely prepared, frequently revised and updated by the Ministry, determine the quantities purchased-mostly in the U.S. and Canada. Despite their volume, these purchases constitute, on average, only about 0.5% of the total trading in these markets and thus have no effect on the market at large. In the world market, the Israeli agency operates as any of the other competitive traders having, however, special needs and constraints. Thus, for instance, practically all purchases must be made in future contracts in order to secure the foreign sources of supply. The Ministry's representatives in the U. S. have, however, considerable freedom to advance or delay purchases according to their assessment of future price trends with the objective of minimizing expenses, provided that all demands are always met and that the foreign sources of supply are secured through future contracts.
The economic theory of rational expectation and market efficiency states that if *The authors would like to thank Edna Schechtman, Frank Edwards, Shrnuel Straws, and an anonymous referee for helpful comments.