Abstract
This study estimates the cost of forward contracting corn and soybeans for January and March delivery from 1980 through 2009. Both corn and soybeans exhibited a downward trend in the cost of forward contracting for January delivery, in contrast to previous pre-harvest results, and the March delivery cost of forward contracting is slightly downward sloped. The cost of post-harvest forward contracting corn and soybeans averaged 2 cents and 6 cents respectively; this was much less than the cost of pre-harvest forward contracting in recent years. We did not find an increase in cost associated with income shifting associated with January delivery. We conclude that January forward contracts offer a relatively inexpensive means of smoothing income across years.
Original language | English (US) |
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Pages (from-to) | 47-62 |
Number of pages | 16 |
Journal | Agribusiness |
Volume | 31 |
Issue number | 1 |
DOIs | |
State | Published - Dec 1 2015 |
Keywords
- Cash flow risk
- Corn
- Cost
- Counterparty risk
- Forward contract
- Income
- Post harvest
- Soybeans
ASJC Scopus subject areas
- Food Science
- Geography, Planning and Development
- Animal Science and Zoology
- Agronomy and Crop Science
- Economics and Econometrics