Coffee is the world’s second largest legal export commodity (after oil) and is the second largest source of foreign exchange for developing nations. The United States consumes about one-fifth of the world’s coffee. The International Coffee Organization (ICO) computes a coffee price index using Colombian, Brazilian, and a mixture of other coffee data. Data are provided for the monthly average ICO price index (in $US) from January 1990 to December 2017.

Here’s an autoregressive model for the composite prices.

a) Here are the last several values of the series: 128.24, 124.46, 120.01, 117.26, and 114.00. What price does this model predict for the next value in the series 1t = 3372?
b) Find a prediction based on a 2-point moving average.