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Post-Harvest Grain Storing And Hedging With Efficient Futures

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  • Kastens, Terry L.
  • Dhuyvetter, Kevin C.

Abstract

This study simulates whether Kansas wheat, soybean, corn, and milo producers could have profitably used deferred futures plus historical basis cash price expectations for post-harvest unhedged and hedged grain storage decisions from 1985-97. The signaled storage decision is compared to a representative Kansas producer whose crop sales mimic average Kansas marketings each year. Using 23 grain price locations, the simulations resulted in an 11 cents per bushel annual increase in grain storage profits for wheat, 27 cents for soybeans, -17 cents for corn, and -20 cents for milo; however, storage profit differences varied substantially across locations. Hedging tended to decrease risk, but not impact profitability.

Suggested Citation

  • 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(2), pages 1-24, December.
    • Handle: RePEc:ags:jlaare:30800
    DOI: 10.22004/ag.econ.30800
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    References listed on IDEAS

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    Cited by:

    1. Stamatina, Stamatina & Banerjee, Simanti & Walters, Cory, 2020. "Safety First Risk Preferences and Post-Harvest Grain Marketing A Context-rich Lab Experiment," Cornhusker Economics 307131, University of Nebraska-Lincoln, Department of Agricultural Economics.
    2. Taylor, Mykel & Tonsor, Glynn & Dhuyvetter, Kevin, 2014. "Structural Change in Forward Contracting Costs for Kansas Wheat," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-13.
    3. Joni M. Klumpp & B. Wade Brorsen & Kim B. Anderson, 2008. "Market Advisory Service Recommendations and Wheat Producers' Selling Decisions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(1), pages 117-128, March.
    4. 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).
    5. Yoon, Byung-Sam & Brorsen, B. Wade, 2002. "Market Inversion in Commodity Futures Prices," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 34(3), pages 459-476, December.
    6. Parcell, Joseph L., 2002. "Crop Basis Patterns In The Presence Of Spatial Competition And Government Intervention," Working Papers 26043, University of Missouri Columbia, Department of Agricultural Economics.
    7. 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).
    8. 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.
    9. Jean Loic Begue Turon & Jean Cordier & Sandrine Hallot & Jean Baptiste Plasmans & David Weiller, 2016. "Utilisation des marchés à terme par les acteurs commerciaux exposés à la volatilité des marchés de grains et du sucre," Working Papers hal-02068381, HAL.
    10. Taylor, Mykel R. & Dhuyvetter, Kevin C. & Kastens, Terry L., 2006. "Forecasting Crop Basis Using Historical Averages Supplemented with Current Market Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(3), pages 1-19, December.
    11. Zulauf, Carl & Kim, Sanghyo, 2020. "U.S. Market Net Return and Risk to Storing Corn and Soybeans, 1974–2017," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2020.
    12. Siaplay, Mounir & Anderson, Kim B. & Brorsen, B. Wade, 2007. "Using Basis and Futures Prices as a Barometer in Deciding Whether to Store Grain or Not," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37575, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    13. Parcell, Joseph L., 2000. "The Impact Of The Ldp On Corn And Soybean Basis In Missouri," 2000 Conference, April 17-18 2000, Chicago, Illinois 18932, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.

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