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Preharvest Marketing Strategies Increase Net Returns for Corn and Soybean Growers

Author

Listed:
  • Robert N. Wisner
  • E. Neal Blue
  • E. Dean Baldwin

Abstract

Grain producers price grain prior to harvest to reduce financial risk and to enhance net returns. Because accomplishing the second objective is debatable, alternative corn and soybean preharvest options and hedge marketing strategies were designed to test the hypothesis that preharvest pricing could generate statistically higher average net returns than harvest sales without increasing variability. Weekly seasonal futures price patterns from 1975 to 1994 were used to time marketings. The strategies were applied to Iowa and Ohio model farms. The hypothesis was accepted for some strategies that included options but not for futures-only strategies.

Suggested Citation

  • Robert N. Wisner & E. Neal Blue & E. Dean Baldwin, 1998. "Preharvest Marketing Strategies Increase Net Returns for Corn and Soybean Growers," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(2), pages 288-307.
    • Handle: RePEc:oup:revage:v:20:y:1998:i:2:p:288-307.
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    File URL: http://hdl.handle.net/10.2307/1349991
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    Cited by:

    1. Neyhard, James & Tauer, Loren & Gloy, Brent, 2013. "Analysis of Price Risk Management Strategies in Dairy Farming Using Whole-Farm Simulations," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(2), pages 1-15, May.
    2. O'Brien, Daniel M., 2000. "Do Profitable Grain Marketing Strategies Exist For Kansas Crops?," 2000 Annual meeting, July 30-August 2, Tampa, FL 21758, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Andrea E. Woolverton & Michael E. Sykuta, 2009. "Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross-Country Comparative," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(4), pages 834-852, December.
    4. Davis, Todd D. & Patrick, George F. & Coble, Keith H. & Knight, Thomas O. & Baquet, Alan E., 2005. "Forward Pricing Behavior of Corn and Soybean Producers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-16, April.
    5. Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes & Jackson, Thomas E., 2000. "Do Agricultural Market Advisory Services Beat The Market? Evidence From The Corn And Soybean Markets Over 1995-1998," AgMAS Project Research Reports 14786, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    6. Todd H. Kuethe & Mitch Morehart, 2012. "The profit impacts of risk management tool adoption," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 104-116, May.
    7. Peterson, Hikaru Hanawa & Tomek, William G., 2000. "Commodity Price Behavior: A Rational Expectations Storage Model of Corn," Working Papers 127682, Cornell University, Department of Applied Economics and Management.
    8. Joao Martines-Filho, 2006. "The Performance of Agricultural Market Advisory Services in Corn and Soybeans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 162-181.
    9. Jirik, Mark A. & Irwin, Scott H. & Good, Darrel L. & Jackson, Thomas E. & Martines-Filho, Joao Gomes, 2000. "The Performance Of Agricultural Market Advisory Services In Marketing Wheat," 2000 Conference, April 17-18 2000, Chicago, Illinois 18928, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    10. Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes & Batts, Ryan M., 2006. "The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2004," AgMAS Project Research Reports 37513, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    11. Irwin, Scott H. & Jackson, Thomas E. & Good, Darrel L., 1999. "Do Agricultural Market Advisory Services Beat The Market? Evidence From The Corn And Soybean Markets Over 1995-1997," AgMAS Project Research Reports 14789, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    12. Batts, Ryan M. & Irwin, Scott & Good, Darrel, 2009. "The Pricing Performance of Market Advisory Services in Wheat Over 1995-2004," AgMAS Project Research Reports 183426, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    13. McNew, Kevin & Musser, Wesley N., 2000. "Evidence Of Farmer Forward Pricing Behavior," Working Papers 28568, University of Maryland, Department of Agricultural and Resource Economics.
    14. Irwin, Scott H. & Martines-Filho, Joao Gomes & Good, Darrel L., 2003. "The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2001," AgMAS Project Research Reports 37510, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    15. Nivens, Heather D. & Kastens, Terry L. & Dhuyvetter, Kevin C., 2002. "Payoffs To Farm Management: How Important Is Crop Marketing?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(1), pages 1-12, April.
    16. 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).
    17. Jirik, Mark A. & Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes & Jackson, Thomas E., 2001. "Do Agricultural Market Advisory Services Beat The Market? Evidence From The Wheat Market Over 1995-1998," AgMAS Project Research Reports 14778, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    18. Markus Arlindo Monteiro & Bennie Grové & Nicolette Matthews, 2022. "Developing a Moving Average Crossover Strategy as an Alternative Hedging Strategy for the South Africa Maize Market," Agriculture, MDPI, vol. 12(8), pages 1-14, August.
    19. 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).
    20. 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.
    21. Good, Darrel L. & Martines-Filho, Joao Gomes & Irwin, Scott H., 2002. "The Pricing Performance Of Market Advisory Services In Corn And Soybeans Over 1995-2000," AgMAS Project Research Reports 14784, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    22. Good, Darrel L. & Irwin, Scott H. & Martines-Filho, Joao Gomes & Hagedorn, Lewis A., 2005. "The Pricing Performance of Market Advisory Services in Corn and Soybeans over 1995-2003," AgMAS Project Research Reports 14775, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.

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