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Abstract

Commodity markets work well in the U.S. because they standardize the products being sold. Using hedonic pricing models, this paper investigates the quality attributes that make soybeans differentiated across the U.S. and the possible implications that quality adjusted prices may have in today’s markets. A hedonic model was tested using soybean prices from 2004 to 2013 to adjust for quality. A test was then conducted to show the price change over time due to quality changes in soybeans. Results show that quality-adjusted pricing may affect forecasting and hedging with stronger correlations computed between futures prices and quality adjusted prices than futures prices and observed prices.

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