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The Cost Of Forward Contracting In The Cif Nola Export Bid Market

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  • MCKENZIE, ANDREW M.
  • ISBELL, BRADLEY J.
  • BRORSEN, B. WADE

Abstract

The CIF NOLA “river market” represents an important but opaque forward market that serves Gulf exporters and elevators. CIF NOLA bids function similarly to traditional forward contracts; however, like a futures market, firms can offset their forward contractual obligations by offsetting positions in a liquid off-exchange paper market. Analysis shows grain sellers pay a risk premium for fall harvest delivery contracts. However, outside of fall harvest, contract liquidity, coupled with a good institutional balance of long and short market participants, mostly removes the pricing bias commonly found in farmer forward contracting in corn and soybeans.

Suggested Citation

  • Mckenzie, Andrew M. & Isbell, Bradley J. & Brorsen, B. Wade, 2019. "The Cost Of Forward Contracting In The Cif Nola Export Bid Market," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(1), pages 164-181, February.
    • Handle: RePEc:cup:jagaec:v:51:y:2019:i:01:p:164-181_00
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    Cited by:

    1. Mohammad Hasan Mobarok & Wyatt Thompson & Theodoros Skevas, 2024. "Sensitivity of the United States crop basis and distribution network to precipitation," Agribusiness, John Wiley & Sons, Ltd., vol. 40(4), pages 908-925, October.
    2. Bradley Isbell & Andrew M. McKenzie & B. Wade Brorsen, 2020. "The cost of forward contracting in the Mississippi barge freight river market," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 226-241, April.
    3. Kamrud, Gwen & Wilson, William W. & Bullock, David W., 2023. "Logistics competition between the U.S. and Brazil for soybean shipments to China: An optimized Monte Carlo simulation approach," Journal of Commodity Markets, Elsevier, vol. 31(C).

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