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Post-Harvest Grain Storing And Hedging With Efficient Futures

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  • Kastens, Terry L.
  • Dhuyvetter, Kevin C.

Abstract

This study simulates whether Kansas wheat, soybean, corn, and milo producers could have profitably used deferred futures plus historical basis cash price expectations for post-harvest unhedged and hedged grain storage decisions from 1985-97. The signaled storage decision is compared to a representative Kansas producer whose crop sales mimic average Kansas marketings each year. Using 23 grain price locations, the simulations resulted in an 11 cents per bushel annual increase in grain storage profits for wheat, 27 cents for soybeans, -17 cents for corn, and –20 cents for milo; however, storage profit differences varied substantially across locations. Hedging tended to decrease risk, but not impact profitability.

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File URL: http://purl.umn.edu/30800
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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 24 (1999)
Issue (Month): 02 (December)
Pages:

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Handle: RePEc:ags:jlaare:30800

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Web page: http://waeaonline.org/
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Keywords: Agribusiness;

References

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  1. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, April.
  2. Jackson, Thomas E. & Irwin, Scott H. & Good, Darrel L., 1998. "1996 Pricing Performance Of Market Advisory Services For Corn And Soybeans," AgMAS Project Research Reports 14787, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
  3. Kastens, Terry L. & Jones, Rodney D. & Schroeder, Ted C., 1998. "Futures-Based Price Forecasts For Agricultural Producers And Businesses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
  4. Kastens, Terry L. & Schroeder, Ted C. & Plain, Ronald L., 1998. "Evaluation Of Extension And Usda Price And Production Forecasts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
  5. Carl R. Zulauf & Scott H. Irwin, 1997. "Market Efficiency and Marketing to Enhance Income of Crop Producers," Finance 9711004, EconWPA.
  6. Hayenga, Marvin L. & Jiang, Bingrong, 1997. "Corn and Soybean Basis Behavior and Forecasting: Fundamental and Alternative Approaches," Staff General Research Papers 10400, Iowa State University, Department of Economics.
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Cited by:
  1. Peterson, Hikaru Hanawa & Tomek, William G., 2001. "Income Enhancing and Risk Management Properties of Marketing Practices," Working Papers 127653, Cornell University, Department of Applied Economics and Management.
  2. Yoon, Byung-Sam & Brorsen, B. Wade, 2002. "Market Inversion In Commodity Futures Prices," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(03), December.
  3. Siaplay, Mounir & Anderson, Kim B. & Brorsen, B. Wade, 2007. "Using Basis and Futures Prices as a Barometer in Deciding Whether to Store Grain or Not," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37575, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  4. Tomek, William G. & Peterson, Hikaru Hanawa, 2000. "Risk Management In Agricultural Markets: A Survey," 2000 Producer marketing and Risk Management Conference, January 13-14, Orlando, FL 19580, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Parcell, Joseph L., 2000. "The Impact Of The Ldp On Corn And Soybean Basis In Missouri," 2000 Conference, April 17-18 2000, Chicago, Illinois 18932, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  6. Taylor, Mykel R. & Dhuyvetter, Kevin C. & Kastens, Terry L., 2006. "Forecasting Crop Basis Using Historical Averages Supplemented with Current Market Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(03), December.
  7. Peterson, Hikaru Hanawa & Tomek, William G., 2001. "Income-Enhancing And Risk-Reducing Properties Of Marketing Practices," 2001 Annual meeting, August 5-8, Chicago, IL 20613, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Parcell, Joseph L., 2002. "Crop Basis Patterns In The Presence Of Spatial Competition And Government Intervention," Working Papers 26043, University of Missouri Columbia, Department of Agricultural Economics.

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