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Forward Pricing Behavior of Corn and Soybean Producers

Author Info

Listed author(s):
  • Davis, Todd D.
  • Patrick, George F.
  • Coble, Keith H.
  • Knight, Thomas O.
  • Baquet, Alan E.

Abstract

Forward pricing behavior of random samples of Indiana, Nebraska, and Mississippi crop producers was analyzed using Heckman’s two-step limited information maximum likelihood estimation procedure. Producers who forward priced during the 1995-1998 period generally expected to forward price in 1999 using similar techniques. Probit models were estimated for cash forward contracts and taking a direct position in futures or options separately and combined. Results provide limited support for the hypothesis that forward pricing should be analyzed as an adoption decision. Variables reflecting risk attitudes do affect the decision to use forward pricing, while variables to economic position affect the level of forward pricing.

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File URL: http://purl.umn.edu/43722
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Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 37 (2005)
Issue (Month): 01 (April)
Pages:

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Handle: RePEc:ags:joaaec:43722
Contact details of provider: Web page: http://www.saea.org/jaae/jaae.htm

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Keywords: forward contracts; futures; grain marketing; Heckman procedure; Crop Production/Industries; Marketing; Production Economics; Q130; Q120;

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  1. Park, Timothy A. & Florkowski, Wojciech J., 1999. "Demand and Quality Uncertainty in Pecan Purchasing Decisions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(01), pages 29-39, April.
  2. Townsend, John P. & Brorsen, B. Wade, 2000. "Cost Of Forward Contracting Hard Red Winter Wheat," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(01), April.
  3. Brorsen, B. Wade & Anderson, Kim B., 1994. "Cash Wheat Marketing: Strategies for Real People," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 12(2).
  4. repec:ags:joaaec:v:32:y:2000:i:1:p:89-94 is not listed on IDEAS
  5. B.I. Shapiro & B. Wade Brorsen, 1988. "Factors Affecting Farmers' Hedging Decisions," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 10(2), pages 145-153.
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Cited by:

  1. Jordaan, Henry & Grove, Bennie, 2008. "Factors affecting the use of forward pricing methods in price risk management with special reference to the influence of risk aversion," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(1), March.
  2. Mofokeng, Maine & Vink, Nick, 2013. "Factors Affecting the Hedging Decision of Maize Farmers in Gauteng Province," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161465, African Association of Agricultural Economists (AAAE).
  3. Rejesus, Roderick M. & Knight, Thomas O. & Jaramillo, Mauricio & Coble, Keith H. & Patrick, George F. & Baquet, Alan E., 2008. "Preference for Risk Management Information Sources: Implications for Extension and Outreach Programming," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), April.
  4. Jacobs, Keri & Li, Ziran & Hayes, Dermot, 2016. "Price responses in forward contracting: do we limit the upside and expose the downside?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235539, Agricultural and Applied Economics Association.
  5. Raza Ullah & Ganesh P. Shivakoti & Asif Kamran & Farhad Zulfiqar, 2016. "Farmers versus nature: managing disaster risks at farm level," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(3), pages 1931-1945, July.
  6. Jordaan, Henry & Grove, Bennie, 2007. "Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(4), December.

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