Do Futures Benefit Farmers?

Lence, Sergio

Do Futures Benefit Farmers?

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Simulations are used to analyze welfare and market- and farm-level effects of making futures available to producers of a storable commodity. Key features of the model are the explicit consideration of dynamic impacts due to inventories, and of aggregate market effects associated with futures adoption by some producers. Application to the natural rubber market shows that futures availability can lead to sizeable market- and farm-level effects. Futures availability enhances consumer welfare, reduces non-adopter welfare, and yields important welfare gains for adopters when their market share is small and welfare losses when they account for a sufficiently large market share.

Keywords: Commodity markets; futures; natural rubber; rational expectations; storage model; welfare analysis (search for similar items in EconPapers)
JEL-codes: C61 G13 Q11 Q13 (search for similar items in EconPapers)
Date: 2008-04-19
New Economics Papers: this item is included in nep-agr and nep-fmk
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Citations: View citations in EconPapers (1)

Published in American Journal of Agricultural Economics, February 2009, vol. 91 no. 1, pp. 154-167

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Journal Article: Do Futures Benefit Farmers? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:12919

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