Grain price expectations of illinois farmers and grain merchandisers

James S. Eales, Brian K. Engel, Robert J. Hauser, Sarahelen R. Thompson

Research output: Contribution to journalArticlepeer-review


The study’s purpose is to measure the extent to which futures and option prices reflect the subjective price distribution of a subset of market participants, farmers, and grain merchandisers in Illinois. Findings suggest that in most instances the futures price is an appropriate proxy for expected price. However, volatilities implied by option premia usually overestimate the subjective variances of producers and merchandisers. These differences between individual and market expectations of variance are consistent with findings of overconfidence in the psychology literature and should be considered by analysts when making observations about hedging decisions and risk aversion.

Original languageEnglish (US)
Pages (from-to)701-708
Number of pages8
JournalAmerican Journal of Agricultural Economics
Issue number3
StatePublished - Aug 1990


  • Implied volatilities
  • Judgment
  • Options and futures markets
  • Price expectations
  • Subjective distributions

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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