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Farmer Forward Pricing Behavior: Evidence from Marketing Clubs

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  • McNew, Kevin
  • Musser, Wesley N.

Abstract

Numerous studies have investigated how farmers should use forward pricing markets, but only limited research exists on how farmers actually use these markets. This study relies on data from a real-time forward pricing game employed by Maryland grain marketing clubs from 1994 through 1998. Hypotheses are tested regarding the consistency of farmer behavior with the research literature on hedging. Findings indicate that farmers do not achieve price enhancement, a result consistent with the efficient market hypothesis. However, pricing behavior does not conform to the implications of efficient market models in a number of respects, suggesting farmers may form different expectations than those conveyed by forward prices.
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Suggested Citation

  • McNew, Kevin & Musser, Wesley N., 2002. "Farmer Forward Pricing Behavior: Evidence from Marketing Clubs," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(02), pages 200-210, October.
  • Handle: RePEc:cup:agrerw:v:31:y:2002:i:02:p:200-210_00
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    Cited by:

    1. Mattos, Fabio, 2012. "Do producers exhibit disposition effect? Evidence from grain marketing," Working Papers 125279, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    2. Mattos, Fabio & Poirier, Jamie, 2013. "Formation and adaptation of reference prices in grain marketing: An experimental study," Working Papers 148591, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    3. 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, Boston, Massachusetts 235539, Agricultural and Applied Economics Association.
    4. Lewis T. Cunningham & B. Wade Brorsen & Kim B. Anderson & Emílio Tostão, 2008. "Gender differences in marketing styles," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 1-7, January.
    5. Mattos, Fabio & Poirier, Jamie, 2013. "Formation and Adaptation of Reference Prices in Grain Marketing: An Experimental Study," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149672, Agricultural and Applied Economics Association.

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