Research on World Agricultural Economy

Resilience of Grain Storage Markets to Upheaval in Futures Markets

Emma Hayhurst

1. Consolidated Grain and Barge Co., Catoosa, OK, 74015, USA
2. Department of Agricultural Economics, Oklahoma State University, Stillwater, OK, 74078, USA

B. Wade Brorsen

Department of Agricultural Economics, Oklahoma State University, Stillwater, OK, 74078, USA

DOI: https://doi.org/10.36956/rwae.v4i2.826

Received: 14 March 2023; Received in revised form: 14 April 2023; Accepted: 20 April 2023; Published: 25 April 2023

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Abstract

The past two decades have had times when grain cash and futures markets did not converge during delivery. What was the economic impact of this non-convergence on storage markets? To answer this question the supply of storage is estimated for corn, soybeans, and wheat. The lack of convergence is measured using a historical basis. The econometric model shows no relationship between the supply of storage and the lack of convergence. Thus, empirical results suggest that markets were able to adapt to the lack of convergence. Overall, the research indicates the resilience of storage markets to structural change.

Keywords: Basis, Convergence, Hedging, Storage

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