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An Analysis Of The Role Of Futures Prices, Cash Prices And Government Programs In Acreage Response

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Author Info

  • Chavas, Jean-Paul
  • Pope, Rulon D.
  • Kao, Robert S.

Abstract

An integrated investigation of futures price, cash price, and government programs is presented in the context of an econometric model of acreage supply response for U.S. corn and soybeans. The analysis refines the role of different sources of price information in the farmers' acreage decision. It is found that the government corn support price program plays a major role in corn and soybean production decisions. Also, the results indicate that futures prices are not good proxies for expected future cash prices in the presence of government programs. This raises questions about the information efficiency of futures prices when government intervenes in the market place.

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File URL: http://purl.umn.edu/32481
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Bibliographic Info

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

Volume (Year): 08 (1983)
Issue (Month): 01 (July)
Pages:

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Handle: RePEc:ags:wjagec:32481

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

Keywords: Crop Production/Industries;

References

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  1. Houck, James P. & Ryan, Mary E., 1972. "Supply Analysis For Corn In The United States: The Impact Of Changing Government Programs," Staff Papers 13554, University of Minnesota, Department of Applied Economics.
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Citations

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Cited by:
  1. Chembezi, Duncan M. & Womack, Abner W., 1992. "Regional Acreage Response For U.S. Corn And Wheat: The Effects Of Government Programs," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(01), July.
  2. Koo, Won W. & Lehman, James R., 1984. "Effects of Government Programs on Corn, Soybeans, and Wheat Production in the U.S," Agricultural Economics Reports 23141, North Dakota State University, Department of Agribusiness and Applied Economics.
  3. Lin, Chien-Pang & Barkley, Andrew P., 1997. "Declining Commodity Program Payments and Enhanced Environmental Regulations: Impacts on Acreage Allocation in the Great Plains," 1997 Annual Meeting, July 13-16, 1997, Reno\Sparks, Nevada 35932, Western Agricultural Economics Association.
  4. Wu, JunJie & Adams, Richard M. & Kling, Catherine L. & Tanaka, Katsuya, 2003. "Assessing the Costs and Environmental Consequences of Agricultural Land Use Changes: A Site-Specific, Policy-Scale Modeling Approach," Staff General Research Papers 10358, Iowa State University, Department of Economics.
  5. O'Donoghue, Erik J. & Whitaker, James B., 2006. "How distorting are direct payments?," 2006 Annual meeting, July 23-26, Long Beach, CA 21247, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Dirk J. Bezemer, 2001. "Risk and De-collectivization in the Czech Republic," Development and Comp Systems 0106002, EconWPA.
  7. Holt, Matthew T., 1999. "A Linear Approximate Acreage Allocation Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
  8. Shideed, Kamil H. & White, Fred C. & Brannen, Stephen J., 1987. "The Responsiveness Of U.S. Corn And Soybean Acreages To Conditional Price Expectations: An Application To The 1985 Farm Bill," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(02), December.
  9. Houston, Jack E. & Sun, Henglun, 1999. "Cost-Share Incentives And Best Management Practices In A Pilot Water Quality Program," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
  10. Ubilava, David, 2008. "Analysis of the Soybean-to-Corn Price Ratio and its Impact on Farmers' Planting Decision-Making in Indiana," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6783, Southern Agricultural Economics Association.
  11. Bakhshi, Samira & Kerr, William A., 2009. "Is There Supply Distortion In The Green Box? An Acreage Response Approach," Working Papers 51093, Canadian Agricultural Trade Policy Research Network.
  12. Vedenov, Dmitry V., 2003. ""Irrational" Planting Behavior As Rational Expectations Of Government Support," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35237, Southern Agricultural Economics Association.
  13. Krause, Joyce Hall & Brorsen, B. Wade, 1995. "Outcomes of government corn support policies under alternate assumptions of risk," Journal of Policy Modeling, Elsevier, vol. 17(3), pages 279-291, June.
  14. Houston, Jack E. & McIntosh, Christopher S. & Stavriotis, Paul A. & Turner, Steven C., 1999. "Leading Indicators Of Regional Cotton Acreage Response: Structural And Time Series Modeling Results," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(03), December.
  15. Chembezi, Duncan M. & Cacho, Joyce A., 1997. "Alternative Price Expectation Formulation and Information Access," 1997 Annual Meeting, July 13-16, 1997, Reno\Sparks, Nevada 35905, Western Agricultural Economics Association.
  16. Shideed, Kamil H. & White, Fred C., 1989. "Alternative Forms Of Price Expectations In Supply Analysis For U.S. Corn And Soybean Acreages," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(02), December.
  17. Dumas, Christopher F. & Goodhue, Rachael E., 1999. "The Cotton Acreage Effects Of Boll Weevil Eradication: A County-Level Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(03), December.
  18. Burton, Diana M. & Love, H. Alan, 1996. "A Review Of Alternative Expectations Regimes In Commodity Markets: Specification, Estimation, And Hypothesis Testing Using Structural Models," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), October.
  19. Boussios, David & Barkley, Andrew P., 2012. "Kansas Grain Supply Response to Economic and Biophysical Factors, 1977-2007," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124385, Agricultural and Applied Economics Association.
  20. Christian Langpap & JunJie Wu, 2011. "Potential Environmental Impacts of Increased Reliance on Corn-Based Bioenergy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(2), pages 147-171, June.
  21. Stavriotis, Paul A. & Houston, Jack E. & McIntosh, Christopher S. & Turner, Steven C., 1998. "Leading Indicators For Regional Cotton Response: Structural And Time Series Modeling Results," Faculty Series 16717, University of Georgia, Department of Agricultural and Applied Economics.

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