Historical Corn Price Evolution Implications for Pre-harvest Hedging

Cory Walters and Richard K. Preston

No 413310, Cornhusker Economics from University of Nebraska-Lincoln, Department of Agricultural Economics

Abstract:

Commodity markets evolve through information provided by participating buyers and sellers and throughout this process the conditions in which commodity markets work are revealed. Producer pre-harvest commodity marketing can be further developed by incorporating information on how commodity markets work, leading to better farm financial performance.

We investigate how commodity markets have historically evolved from spring to fall. While changes in future prices appear random in any given year, observing average daily prices over 32 years could uncover a seasonal tendency. In the past 32 years, the average daily price tends to be higher in the spring than the fall, suggesting an average seasonal tendency exists. This seasonal tendency ( or drift) has led many market advisors to suggest pricing some of producer's expected production before harvest.

While a seasonal was found in the historical data, only the evolution of additional unknown future price paths will contribute to additional evidence of whether a seasonal pattern exists or that the historical seasonal used here was an anomaly due to the short number of years.

Keywords: Production; Economics (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nbaece:413310

DOI: 10.22004/ag.econ.413310

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