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A Case Study of a Market Advisory Service's Performance in Marketing Hard Red Winter Wheat in Kansas

Author

Listed:
  • Kalous, Tod
  • Dhuyvetter, Kevin
  • Kastens, Terry

Abstract

Crop marketing, and specifically the efficiency of markets, is a topic of much interest and debate in the agricultural industry. This case study examines the effectiveness of a marketing advisory service (MAS) in pricing hard red winter wheat in Kansas. The post-harvest recommendations of this particular MAS followed by a wheat producer in northwest Kansas over a 32- year time period were analyzed. Results indicate that the net price received following the MAS's recommendations were statistically no better than simply selling at harvest given commercial storage costs and bank interest rates. With lower storage costs, the MAS did receive a premium of 13¢ per bushel compared to harvest sales. A cash marketer storing and selling grain at the same time as the MAS marketer, but without forward contracting, would have been 10¢ per bushel worse off than the MAS marketer. This MAS gain was due to its ability to secure a stronger basis level and pick up short term price movement gains. However, these strengths of the MAS were offset by its fees and by the fact that they tended to store wheat too long.

Suggested Citation

  • Kalous, Tod & Dhuyvetter, Kevin & Kastens, Terry, 2005. "A Case Study of a Market Advisory Service's Performance in Marketing Hard Red Winter Wheat in Kansas," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2005, pages 1-10.
    • Handle: RePEc:ags:jasfmr:190712
    DOI: 10.22004/ag.econ.190712
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    File URL: https://ageconsearch.umn.edu/record/190712/files/229.pdf
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    Cited by:

    1. 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.
    2. 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.

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