Forward Contracting Costs for Illinois Corn and Soybeans: Implications for Producer Pricing Strategies

The implied costs of forward contracting Illinois corn and soybean prices at planting-time are estimated. Thirty years of basis data are collected for seven regions in Illinois. Forward basis quotes are collected at planting-time (May) and actual basis levels are recorded at harvest time (October). Costs embedded in the forward basis quote are estimated and the implications for producer marketing strategies are examined. The results suggest that elevators' embedded premium-producers' cost of forward contracting-are rather small, especially for corn. Forward contracting costs vary significantly across the state. Implications for producer risk management strategies are explored.


Issue Date:
2006
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/190691
Published in:
Journal of the ASFMRA (American Society of Farm Managers and Rural Appraisers), 2006
Page range:
49-56
Total Pages:
8




 Record created 2017-04-01, last modified 2018-01-22

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