IDEAS home Printed from https://ideas.repec.org/a/ags/reowae/334260.html
   My bibliography  Save this article

Resilience of Grain Storage Markets to Upheaval in Futures Markets

Author

Listed:
  • Hayhurst, Emma
  • Brorsen, B. Wade

Abstract

The past two decades have had times when grain cash and futures markets did not converge during delivery. What was the economic impact of this non-convergence on storage markets? To answer this question the supply of storage is estimated for corn, soybeans, and wheat. The lack of convergence is measured using a historical basis. The econometric model shows no relationship between the supply of storage and the lack of convergence. Thus, empirical results suggest that markets were able to adapt to the lack of convergence. Overall, the research indicates the resilience of storage markets to structural change.

Suggested Citation

  • Hayhurst, Emma & Brorsen, B. Wade, 2023. "Resilience of Grain Storage Markets to Upheaval in Futures Markets," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 4(2), April.
    • Handle: RePEc:ags:reowae:334260
    DOI: 10.22004/ag.econ.334260
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/334260/files/RWAE-0402-826.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.334260?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hatchett, Robert B. & Brorsen, B. Wade & Anderson, Kim B., 2010. "Optimal Length of Moving Average to Forecast Futures Basis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(1), pages 1-16.
    2. Sophie van Huellen, 2018. "How financial investment distorts food prices: evidence from U.S. grain markets," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 171-181, March.
    3. Goswami, Alankrita & Adjemian, Michael K. & Karali, Berna, 2022. "The impact of futures contract storage rate policy on convergence expectations in domestic commodity markets," Food Policy, Elsevier, vol. 111(C).
    4. Fabian Capitanio & Giorgia Rivieccio & Felice Adinolfi, 2020. "Food Price Volatility and Asymmetries in Rural Areas of South Mediterranean Countries: A Copula-Based GARCH Model," IJERPH, MDPI, vol. 17(16), pages 1-14, August.
    5. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399.
    6. Thompson, Nathanael M. & Edwards, Aaron J. & Mintert, James R. & Hurt, Christopher A., 2019. "Practical Alternatives for Forecasting Corn and Soybean Basis in the Eastern Corn Belt throughout the Crop-Marketing Year," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 44(3), September.
    7. Philip Garcia & Scott H. Irwin & Aaron Smith, 2015. "Futures Market Failure?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 40-64.
    8. Nicholas Kaldor, 1939. "Speculation and Economic Stability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 7(1), pages 1-27.
    9. Scott H. Irwin & Dwight R. Sanders, 2011. "Index Funds, Financialization, and Commodity Futures Markets," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 1-31.
    10. Javier Garcia-Verdugo & Meliyara Sirex Consuegra, 2013. "Estimating functional efficiency in energy futures markets," Economics and Business Letters, Oviedo University Press, vol. 2(3), pages 105-115.
    11. Karali, Berna & McNew, Kevin & Thurman, Walter N., 2018. "Price Discovery and the Basis Effects of Failures to Converge in Soft RedWinter Wheat Futures Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(1), January.
    12. Goswami, Alankrita & Karali, Berna, 2022. "The Impact of Fundamentals on Volatility Measures of Agricultural Substitutes," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 54(4), pages 723-768, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goswami, Alankrita & Adjemian, Michael K. & Karali, Berna, 2022. "The impact of futures contract storage rate policy on convergence expectations in domestic commodity markets," Food Policy, Elsevier, vol. 111(C).
    2. Irwin, Scott H., 2020. "Trilogy for troubleshooting convergence: Manipulation, structural imbalance, and storage rates," Journal of Commodity Markets, Elsevier, vol. 17(C).
    3. Colin A. Carter & Gordon C. Rausser & Aaron Smith, 2017. "Commodity Storage and the Market Effects of Biofuel Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(4), pages 1027-1055.
    4. van Huellen, Sophie, 2020. "Too much of a good thing? Speculative effects on commodity futures curves," Journal of Financial Markets, Elsevier, vol. 47(C).
    5. Symeonidis, Lazaros & Prokopczuk, Marcel & Brooks, Chris & Lazar, Emese, 2012. "Futures basis, inventory and commodity price volatility: An empirical analysis," Economic Modelling, Elsevier, vol. 29(6), pages 2651-2663.
    6. Daniel Grabowski, 2016. "Causes of the 2000s Food Price Surge: New Evidence from Structural VAR," MAGKS Papers on Economics 201631, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Goswami, Alankrita & Karali, Berna & Adjemian, Michael K., 2023. "Hedging with futures during nonconvergence in commodity markets," Journal of Commodity Markets, Elsevier, vol. 32(C).
    8. Atle Oglend & Vesa-Heikki Soini, 2020. "Equilibrium Working Curves with Heterogeneous Agents," Computational Economics, Springer;Society for Computational Economics, vol. 56(2), pages 355-372, August.
    9. Gao, Lin & Hitzemann, Steffen & Shaliastovich, Ivan & Xu, Lai, 2022. "Oil volatility risk," Journal of Financial Economics, Elsevier, vol. 144(2), pages 456-491.
    10. Jaime Casassus & Pierre Collin-Dufresne & Bryan R. Routledge, 2005. "Equilibrium Commodity Prices with Irreversible Investment and Non-Linear Technology," NBER Working Papers 11864, National Bureau of Economic Research, Inc.
    11. Zhu, Xiaohong, 2016. "New models to estimate costs of US farm programs," ISU General Staff Papers 3547, Iowa State University, Department of Economics.
    12. Massimo Guidolin & Manuela Pedio, 2018. "Forecasting Commodity Futures Returns: An Economic Value Analysis of Macroeconomic vs. Specific Factors," BAFFI CAREFIN Working Papers 1886, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    13. Charles O. Manasseh & Jonathan E. Ogbuabor & Obiorah K. Obinna, 2016. "Volatility and Commodity Price Dynamics in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1599-1607.
    14. Ashima Goyal & Shruti Tripathi, 2012. "Regulations and price discovery: oil spot and futures markets," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-016, Indira Gandhi Institute of Development Research, Mumbai, India.
    15. Etienne, Xiaoli L. & Irwin, Scott H. & Garcia, Philip, 2014. "Bubbles in food commodity markets: Four decades of evidence," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 129-155.
    16. Zhou, Wei, 2015. "Three essays on modeling biofuel feedstock supply," ISU General Staff Papers 201501010800005728, Iowa State University, Department of Economics.
    17. Wiggins, Seth & Etienne, Xiaoli, 2015. "US Natural Gas Price Determination: Fundamentals and the Development of Shale," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205788, Agricultural and Applied Economics Association.
    18. Filippo Natoli, 2021. "Financialization Of Commodities Before And After The Great Financial Crisis," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 488-511, April.
    19. Hall, George & Rust, John, 2021. "Estimation of endogenously sampled time series: The case of commodity price speculation in the steel market," Journal of Econometrics, Elsevier, vol. 222(1), pages 219-243.
    20. Deren Unalmis & Ibrahim Unalmis & Ms. Filiz D Unsal, 2012. "On the Sources and Consequences of Oil Price Shocks: The Role of Storage," IMF Working Papers 2012/270, International Monetary Fund.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:reowae:334260. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.nassg.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.