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The effects of barge shocks on soybean basis levels in Arkansas: A study of market integration

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  • Andrew M. McKenzie

    (Department of Agricultural Economics and Agribusiness, 221 Agriculture Building, University of Arkansas, Fayetteville, AR 72701)

Abstract

The response of Arkansas Delta and Gulf soybean basis levels to barge rate shocks is investigated. Results suggest basis levels react negatively to an increase in the barge rate, implying the burden of higher transportation costs are at least in part transmitted to the farm level. Internal Arkansas Delta markets are highly integrated with the Gulf export market. For example, Gulf soybean shocks, which reflect unexpected increases in soybean export demand, are simultaneously transmitted to internal markets, and result in correspondingly higher Arkansas Delta basis levels. Domestic market disturbances such as crush margin and financial storage cost shocks are found to immediately affect barge rates and to subsequently impact both Gulf and internal basis levels. [EconLit citations: F150.] © 2005 Wiley Periodicals, Inc. Agribusiness 21: 37-52, 2005.

Suggested Citation

  • Andrew M. McKenzie, 2005. "The effects of barge shocks on soybean basis levels in Arkansas: A study of market integration," Agribusiness, John Wiley & Sons, Ltd., vol. 21(1), pages 37-52.
    • Handle: RePEc:wly:agribz:v:21:y:2005:i:1:p:37-52
    DOI: 10.1002/agr.20029
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    References listed on IDEAS

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    Cited by:

    1. Vangelis Tsioumas & Stratos Papadimitriou, 2018. "The dynamic relationship between freight markets and commodity prices revealed," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(2), pages 267-279, June.
    2. Torshizi, Mohammad & Gray, Richard, 2017. "Export Spread, Farmer Revenue and Grain Export Capacity in Western Canada," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 56(1), April.
    3. Yu, Tun-Hsiang & Bessler, David A. & Fuller, Stephen W., 2006. "The Influence of Transportation Rates on Grain Prices: A Dynamic Analysis," 47th Annual Transportation Research Forum, New York, New York, March 23-25, 2006 208036, Transportation Research Forum.
    4. Adjemian, Michael K. & Janzen, Joseph & Carter, Colin A. & Smith, Aaron, 2014. "Deconstructing Wheat Price Spikes: A Model of Supply and Demand, Financial Speculation, and Commodity Price Comovement," Economic Research Report 167369, United States Department of Agriculture, Economic Research Service.
    5. Wetzstein, Brian & Florax, Raymond & Foster, Kenneth & Binkley, James, 2021. "Transportation costs: Mississippi River barge rates," Journal of Commodity Markets, Elsevier, vol. 21(C).
    6. Meyer, Seth D. & Kruse, John, 2007. "Factors Affecting Locking Times at 600 ft. and 1,200 ft. Locks on the Mississippi River with an Examination of Excessive Locking Time Charges," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 46(3).
    7. Bradley Isbell & Andrew M. McKenzie & B. Wade Brorsen, 2020. "The cost of forward contracting in the Mississippi barge freight river market," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 226-241, April.
    8. Mohammad Torshizi & Richard Gray, 2018. "An Economic Analysis of Western Canadian Grain Export Capacity," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 255-282, June.
    9. Kamrud, Gwen & Wilson, William W. & Bullock, David W., 2023. "Logistics competition between the U.S. and Brazil for soybean shipments to China: An optimized Monte Carlo simulation approach," Journal of Commodity Markets, Elsevier, vol. 31(C).
    10. Adjemian, Michael K. & Marshall, Kandice K. & Hubbs, Todd & Penn, Jerrod, 2016. "Decomposing Local Prices into Hedgeable and Unhedgeable Shocks," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235874, Agricultural and Applied Economics Association.

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