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Forecasting Crop Basis Using Historical Averages Supplemented with Current Market Information

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Author Info

  • Taylor, Mykel R.
  • Dhuyvetter, Kevin C.
  • Kastens, Terry L.

Abstract

This research compares practical methods of forecasting basis, using current market information for wheat, soybeans, corn, and milo (grain sorghum) in Kansas. Though generally not statistically superior, an historical one-year average was optimal for corn, milo, and soybean harvest and post-harvest basis forecasts. A one-year average was also best for wheat post-harvest basis forecasts, whereas a five-year average was the best method for forecasting wheat harvest basis. Incorporating current market information, defined as basis deviation from historical average, improved the accuracy of post-harvest basis forecasts. A naive forecast incorporating current information was often the most accurate for post-harvest basis forecasts.

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File URL: http://purl.umn.edu/8625
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Bibliographic Info

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

Volume (Year): 31 (2006)
Issue (Month): 03 (December)
Pages:

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Handle: RePEc:ags:jlaare:8625

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Web page: http://waeaonline.org/
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Related research

Keywords: basis forecast; crop basis; current information; naive forecast; Marketing;

References

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  1. Kastens, Terry L. & Dhuyvetter, Kevin C., 1999. "Post-Harvest Grain Storing And Hedging With Efficient Futures," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
  2. repec:jaa:jagape:v:32:y:2000:i:1:p:89-94 is not listed on IDEAS
  3. Townsend, John P. & Brorsen, B. Wade, 1997. "Cost of Forward Contracting Hard Red Winter Wheat," 1997 Annual Meeting, July 13-16, 1997, Reno\Sparks, Nevada 35749, Western Agricultural Economics Association.
  4. Carl R. Zulauf & Scott H. Irwin, 1997. "Market Efficiency and Marketing to Enhance Income of Crop Producers," Finance 9711004, EconWPA.
  5. B. Wade Brorsen & John Coombs & Kim Anderson, 1995. "The cost of forward contracting wheat," Agribusiness, John Wiley & Sons, Ltd., vol. 11(4), pages 349-354.
  6. Schroeder, Ted C. & Parcell, Joseph L. & Kastens, Terry L. & Dhuyvetter, Kevin C., 1998. "Perceptions Of Marketing Strategies: Producers Versus Extension Economists," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
  7. Shi, Wei & Irwin, Scott H. & Good, Darrel L. & Dietz, Sarah N., 2005. "Wheat Forward Contract Pricing: Evidence on Forecast Power and Risk Premia," 2005 Conference, April 18-19, 2005, St. Louis, Missouri 19043, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  8. Tonsor, Glynn T. & Dhuyvetter, Kevin C. & Mintert, James R., 2004. "Improving Cattle Basis Forecasting," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
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Cited by:
  1. Bekkerman, Anton & Pelletier, Denis, 2009. "Basis Volatilities of Corn and Soybean in Spatially Separated Markets: The Effect of Ethanol Demand," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49281, Agricultural and Applied Economics Association.
  2. Welch, J. Mark & Mkrtchyan, Vardan & Power, Gabriel J., 2009. "Predicting the Corn Basis in the Texas Triangle Area," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 27.
  3. Tokovenko, Oleksiy & Gunter, Lewell F., 2008. "Quarterly Storage Model of U.S. Cotton Market: Estimation of the Basis under Rational Expectations," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6435, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Tonsor, Glynn T., 2008. "Hedging in Presence of Market Access Risk," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37621, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.

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