Seasonal Quality Premiums for Wheat
AbstractSeasonal variations of the price premium between bread and feed wheat indicate opportunities to profitably adjusting the grain marketing strategy of farmers that harvest (and store) both qualities. In this paper, we estimate the seasonal pattern of wheat price premiums on the German market by a vector error correction (VECM) approach, which accounts for multivariate autoregressive conditional heteroscedasticity of the error terms. Results indicate a significant downward trend for the premium during the marketing season. The trend’s magnitude depends on the average quality of harvested wheat. If farmers have facilities so separately store bread and feed wheat, they should tend to postpone (move forward) their sales of feed (bread) wheat towards the end (beginning) of the season, particularly in years of low average wheat qualities. The volatility of the price premium significantly decreases over the season indicating higher risks at the beginning.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149744.
Date of creation: 2013
Date of revision:
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Quality Price Premium; Season; Wheat; Germany; Agribusiness; Farm Management; Marketing; Risk and Uncertainty; Q13; C32; L11;
Find related papers by JEL classification:
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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