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Cost of Forward Contracting Hard Red Winter Wheat

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  • Townsend, John P.
  • Brorsen, B. Wade

Abstract

Two methods were used to estimate the cost of forward contracting hard red winter wheat. One hundred days before delivery, the estimated cost of forward contracting ranged from six cents/bu. To eight cents/bu. Thus, further evidence is provided that the cost of forward contracting grain is not zero.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

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  • Townsend, John P. & Brorsen, B. Wade, 2000. "Cost of Forward Contracting Hard Red Winter Wheat," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(01), pages 89-94, April.
  • Handle: RePEc:cup:jagaec:v:32:y:2000:i:01:p:89-94_02
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    1. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    2. Lence, Sergio H., 1996. "Relaxing The Assumptions Of Minimum-Variance Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-17, July.
    3. B. Wade Brorsen & John Coombs & Kim Anderson, 1995. "The cost of forward contracting wheat," Agribusiness, John Wiley & Sons, Ltd., vol. 11(4), pages 349-354.
    4. DeJong, David N, et al, 1992. "Integration versus Trend Stationarity in Time Series," Econometrica, Econometric Society, vol. 60(2), pages 423-433, March.
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    Cited by:

    1. 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. 0(Number 2), pages 1-13.
    2. Shah, Samarth & Brorsen, B. Wade & Anderson, Kim B., 2009. "Liquidity Costs in Futures Options Markets," 2009 Conference, April 20-21, 2009, St. Louis, Missouri 53047, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    3. Escalante, Cesar L. & Barry, Peter J., 2001. "Risk Balancing In An Integrated Farm Risk Management Plan," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 3), pages 1-17, December.
    4. Davis, Todd D. & Patrick, George F. & Coble, Keith H. & Knight, Thomas O. & Baquet, Alan E., 2005. "Forward Pricing Behavior of Corn and Soybean Producers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 1), pages 1-16, April.
    5. 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.
    6. Irwin, Scott H. & Martines-Filho, Joao Gomes & Good, Darrel L., 2003. "The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2001," AgMAS Project Research Reports 37510, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    7. Shi, Wei & Irwin, Scott H. & Good, Darrel L. & Dietz, Sarah N., 2005. "Wheat Forward Contract Pricing: Evidence on Forecast Power and Risk Premia," 2005 Conference, April 18-19, 2005, St. Louis, Missouri 19043, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    8. Stringer, Chris & Sanders, Dwight, 2006. "Forward Contracting Costs for Illinois Corn and Soybeans: Implications for Producer Pricing Strategies," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2006, pages 1-8.
    9. Escalante, Cesar L. & Barry, Peter J., 2001. "Farm-Level Evidence On The Risk Balancing Hypothesis From Illinois Grain Farms," 2001 Annual meeting, August 5-8, Chicago, IL 20617, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Mallory, Mindy L. & Zhao, Wenjiao & Irwin, Scott H., 2012. "Farmer’s Income Shifting Option in Post-harvest Forward Contracting," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124692, Agricultural and Applied Economics Association.
    11. 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. 0(Number 1), pages 1-16.
    12. 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. 0(Number 3), pages 1-19, December.
    13. Good, Darrel L. & Irwin, Scott H. & Martines-Filho, Joao Gomes & Hagedorn, Lewis A., 2005. "The Pricing Performance of Market Advisory Services in Corn and Soybeans over 1995-2003," AgMAS Project Research Reports 14775, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    14. 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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