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Farmer Forward Pricing Behavior: Evidence from Marketing Clubs

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  • McNew, Kevin
  • Musser, Wesley N.

Abstract

Numerous studies have investigated how farmers should use forward pricing markets, but only limited research exists on how farmers actually use these markets. This study relies on data from a real-time forward pricing game employed by Maryland grain marketing clubs from 1994 through 1998. Hypotheses are tested regarding the consistency of farmer behavior with the research literature on hedging. Findings indicate that farmers do not achieve price enhancement, a result consistent with the efficient market hypothesis. However, pricing behavior does not conform to the implications of efficient market models in a number of respects, suggesting farmers may form different expectations than those conveyed by forward prices.

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  • McNew, Kevin & Musser, Wesley N., 2002. "Farmer Forward Pricing Behavior: Evidence from Marketing Clubs," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(2), pages 200-210, October.
    • Handle: RePEc:cup:agrerw:v:31:y:2002:i:02:p:200-210_00
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    References listed on IDEAS

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    1. Kandice H. Kahl, 1983. "Determination of the Recommended Hedging Ratio," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(3), pages 603-605.
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    1. Fabio L. Mattos & Jamie Zinn, 2016. "Formation and adaptation of reference prices in grain marketing: an experimental study," Agricultural Economics, International Association of Agricultural Economists, vol. 47(6), pages 621-632, November.
    2. Colino, Evelyn V. & Cabrini, Silvina M. & Aulerich, Nicole M. & Brandenberger, Tracy L. & Merrin, Robert P. & Shi, Wei & Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes, 2006. "Advisory Service Marketing Profiles for Soybeans over 2002-2004," AgMAS Project Research Reports 37485, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    3. Batts, Ryan M. & Brandenberger, Tracy L. & Irwin, Scott H. & Good, Darrel L., 2009. "Advisory Service Marketing Profiles for Soft Red Winter Wheat over 1995-2004," AgMAS Project Research Reports 183427, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    4. Batts, Ryan M. & Brandenberger, Tracy L. & Irwin, Scott H. & Good, Darrel L., 2009. "Advisory Service Marketing Profiles for Hard Red Winter Wheat over 1995-2004," AgMAS Project Research Reports 183428, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    5. Jacobs, Keri & Li, Ziran & Hayes, Dermot, 2016. "Price Responses in Forward Contracting: Do We Limit The Upside And Expose The Downside?," ISU General Staff Papers 201601010800001017, Iowa State University, Department of Economics.
    6. Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes & Batts, Ryan M., 2006. "The Pricing Performance of Market Advisory Services in Corn and Soybeans Over 1995-2004," AgMAS Project Research Reports 37513, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    7. Mattos, Fabio, 2012. "Do producers exhibit disposition effect? Evidence from grain marketing," Working Papers 125279, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    8. Lewis T. Cunningham & B. Wade Brorsen & Kim B. Anderson & Emílio Tostão, 2008. "Gender differences in marketing styles," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 1-7, January.
    9. Colino, Evelyn V. & Cabrini, Silvina M. & Aulerich, Nicole M. & Brandenberger, Tracy L. & Merrin, Robert P. & Shi, Wei & Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao Gomes, 2006. "Advisory Service Marketing Profiles for Corn over 2002-2004," AgMAS Project Research Reports 37484, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    10. Good, Darrel L. & Irwin, Scott H. & Martines-Filho, Joao Gomes & Hagedorn, Lewis A., 2005. "The Pricing Performance of Market Advisory Services in Corn and Soybeans over 1995-2003," AgMAS Project Research Reports 14775, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.

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