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Seasonal Quality Premiums for Wheat: a Case Study for Northern Germany

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  • Loy, Jens-Peter
  • Holm, Thore
  • Glauben, Thomas
  • Steinhagen, Carsten

Abstract

Seasonal variations of the price premium for bread and feed wheat indicate opportunities to profitably adjust grain marketing strategies of farmers that harvest (and store) both qualities. We estimate the seasonal pattern of price premiums on the German market using a vector error correction approach, which accounts for multivariate autoregressive conditional heteroscedasticity of the error terms. Results indicate a significant downward trend for the seasonal premium, with the trend’s magnitude depending on the average quality of harvested wheat. If farmers separately store both bread and feed wheat, they should tend to sell bread wheat before they sell feed wheat, particularly in years of low average wheat qualities.

Suggested Citation

  • Loy, Jens-Peter & Holm, Thore & Glauben, Thomas & Steinhagen, Carsten, 2014. "Seasonal Quality Premiums for Wheat: a Case Study for Northern Germany," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182707, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae14:182707
    DOI: 10.22004/ag.econ.182707
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    References listed on IDEAS

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    1. Berg, Ernst, 1987. "A Sequential Decision Model to Determine Optimal Farm-Level Grain Marketing Policies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 14(1), pages 91-116.
    2. Leroy Blakeslee, 1997. "Optimal Sequential Grain Marketing Decisions under Risk Aversion and Price Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1140-1152.
    3. Blakeslee, Leroy & Lone, Todd A, 1995. "Modelling Optimal Grain-Marketing Decisions When Prices Are Generated Autoregressively," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(1), pages 87-102.
    4. Suleyman Karaman & Bahattin Cetin & Ayse Oguzlar & Koksal Yagdi, 2009. "Hedonic price estimation for the Turkish bread wheat characteristics," Quality & Quantity: International Journal of Methodology, Springer, vol. 43(6), pages 895-902, November.
    5. Noel D. Uri & Bengt Hyberg, 1996. "The market valuation of wheat quality characteristics," Journal of Economic Studies, Emerald Group Publishing, vol. 23(3), pages 44-63, September.
    6. Goodwin, Barry K. & Smith, Vincent H., 2009. "Harvest-Time Protein Shocks and Price Adjustment in U.S. Wheat Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-19, August.
    7. John C. Henning & Larry J. Martin, 1989. "An Economic Evaluation of Expanded Canadian 3-M Wheat Exports," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 37(3), pages 445-465, November.
    8. Loy, Jens-Peter & Pieniadz, Agata, 2009. "Optimal Grain Marketing Revisited: A German and Polish Perspective," 2009 Conference, August 16-22, 2009, Beijing, China 51058, International Association of Agricultural Economists.
    9. Paul L. Fackler & Michael J. Livingston, 2002. "Optimal Storage by Crop Producers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 645-659.
    10. Parcell, Joseph L. & Stiegert, Kyle W., 1999. "Factors Affecting Wheat Protein Premiums," 1999 Annual meeting, August 8-11, Nashville, TN 21524, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Bruno Larue, 1991. "Is Wheat a Homogeneous Product?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(2), pages 103-117, July.
    12. Michele M. Veeman, 1987. "Hedonic Price Functions for Wheat in the World Market: Implications for Canadian Wheat Export Strategy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 35(3), pages 535-552, November.
    13. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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    Cited by:

    1. Elisabeth Vollmer & Daniel Hermann & Oliver Musshoff, 2019. "The disposition effect in farmers’ selling behavior: an experimental investigation," Agricultural Economics, International Association of Agricultural Economists, vol. 50(2), pages 177-189, March.
    2. Holzer, Patrick & Loy, Jens-Peter, 2016. "Messung Des Vermarktungserfolges Bei Marktfruchtbaubetrieben: Wie Groß Sind Die Unterschiede?," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244893, German Association of Agricultural Economists (GEWISOLA).

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    Keywords

    Crop Production/Industries;

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