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What Killed the Diammonium Phosphate Futures Contract?

Author

Listed:
  • Keith Bollman
  • Philip Garcia
  • Sarahelen Thompson

Abstract

Using a survey of industry participants, and an analysis of price relationships, this paper investigates the demise of the diammonium phosphate futures. The results indicate the diammonium phosphate cash and futures markets were not well linked. The results also suggest that the initial specifications of diammonium phosphate futures contract may have resulted in its use as a forward contract with a high rate of delivery, reducing market participation and limiting liquidity. Ultimately, the contract failed because it was a poor hedging tool, and was perceived by the industry not to offer benefits beyond existing contracting and risk management practices.

Suggested Citation

  • Keith Bollman & Philip Garcia & Sarahelen Thompson, 2003. "What Killed the Diammonium Phosphate Futures Contract?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 483-505.
    • Handle: RePEc:oup:revage:v:25:y:2003:i:2:p:483-505.
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    File URL: http://hdl.handle.net/10.1111/1467-9353.00151
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    References listed on IDEAS

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    1. S.R. Thompson & J.S. Eales & R.J. Hauser, 1990. "An Empirical Analysis of Cash and Futures Grain Price Relationships in the North Central Region," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 12(2), pages 241-254.
    2. Sarahelen Thompson & Philip Garcia & Lynne Dallafior Wildman, 1996. "The demise of the high fructose corn syrup futures contract: A case study," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 16(6), pages 697-724, September.
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    Cited by:

    1. Necla Ilter Kucukcolak, 2019. "Evaluation of Commodity Market Experiences: More Than a Design Issue," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 66-78.
    2. Quintino, Derick David & David, Sergio Adriani, 2013. "Quantitative analysis of feasibility of hydrous ethanol futures contracts in Brazil," Energy Economics, Elsevier, vol. 40(C), pages 927-935.
    3. Rashid, Shahidur, 2015. "Commodity Exchanges and Market Development: What Have we Learned?," 2015 Conference, August 9-14, 2015, Milan, Italy 212488, International Association of Agricultural Economists.
    4. Rashid, Shahidur & Winter-Nelson, Alex & Garcia, Philip, 2010. "Purpose and potential for commodity exchanges in African economies:," IFPRI discussion papers 1035, International Food Policy Research Institute (IFPRI).

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