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Forward Pricing Behavior of Corn and Soybean Producers

Published online by Cambridge University Press:  28 April 2005

Todd D. Davis ,
George F. Patrick ,
Keith H. Coble ,
Thomas O. Knight  and
Alan E. Baquet
Todd D. Davis
Affiliation:
Department of Agricultural and Applied Economics, Clemson University, Clemson, SC
George F. Patrick
Affiliation:
Department of Agricultural Economics, Purdue University, West Lafayette, IN
Keith H. Coble
Affiliation:
Department of Agricultural Economics, Mississippi State University, Mississippi State, MS
Thomas O. Knight
Affiliation:
Department of Agricultural and Applied Economics, Texas Tech University, Lubbock, TX
Alan E. Baquet
Affiliation:
Institute of Agriculture and Natural Resources, University of Nebraska, Lincoln, NE
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Abstract

Forward pricing behavior of random samples of Indiana, Nebraska, and Mississippi crop producers was analyzed using Heckman's two-step limited information maximum likelihood estimation procedure. Producers who forward priced during the 1995–1998 period generally expected to forward price in 1999 using similar techniques. Probit models were estimated for cash forward contracts and taking a direct position in futures or options separately and combined. Results provide limited support for the hypothesis that forward pricing should be analyzed as an adoption decision. Variables reflecting risk attitudes do affect the decision to use forward pricing, while variables related to economic position affect the level of forward pricing.

Keywords

forward contractsfuturesgrain marketingHeckman procedureQ130Q120
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 37 , Issue 1 , April 2005 , pp. 145 - 160
Copyright
Copyright © Southern Agricultural Economics Association 2005

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