Document Type

Thesis - Open Access

Award Date

1986

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Brian Schmiesing

Abstract

South Dakota wheat prices are determined by a complex arbitrage process among commodity complexes, domestic and international destinations, and futures markets. South Dakota's two major classes of wheat, spring wheat and winter wheat, must compete against other classes of wheat and other grains for specific industrial uses. The domestic processing of South Dakota wheat happens primarily outside the state. These domestic markets must compete with international markets. Finally, the futures markets provide a pricing system for arbitrage over time, place and wheat class. The purpose of this thesis is to quantify these relationships. The research objectives, methodology, and sources of data for this thesis are provided in this chapter. Also, discussed are the different classes of wheat and the production and market destinations of wheat. Research Objectives In the analysis of South Dakota's wheat market, this study had five main objectives. 1) Determine the direction of price influences among export ports, domestic destinations and South Dakota wheat markets. 2) Identify the price relationships between the daily price changes in the cash wheat markets and the nearby futures contracts. 3) Determine whether the price relationships between the daily price changes in the cash wheat markets and the nearby futures contracts have changed significantly from one marketing year to the next between July 1, 1980 and June 30, 1985. 4) Determine whether the South Dakota wheat markets basis have improved relative to the other cash wheat markets between July 1, 1980 and June 30, 1985. 5) Determine if a cross-hedge would be more effective in reducing price level risk than traditional hedging. Cross-hedging is the hedging of a commodity not deliverable on a specific futures contract.

Library of Congress Subject Headings

Hedging (Finance)
Wheat Prices
Wheat -- Marketing -- South Dakota

Format

application/pdf

Number of Pages

139

Publisher

South Dakota State University

Rights

No Copyright - United State
http://rightsstatements.org/vocab/NoC-US/1.0/

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