Document Type

Thesis - Open Access

Award Date

1972

Degree Name

Master of Science (MS)

Department

Economics

Abstract

Wheat growers like other fanners speculate every time they plant or store a grain crop. Each year foreign demand, legislation, weather and other price influences cause market fluctuations which further aggravate the speculative situation. This problem is common among producers of hard red spring and winter wheat. Historically, farmers have marketed most of their grain during harvest season. The harvest season usually offers the crop year's low price for wheat.1 Despite this, farmers continue to deliver grain at harvest time. One might question; is this the only time to market grain? There was a time when grain buyers in the Midwest area used the futures market extensively to protect their marketing margin against price changes in the interval before 4elivery to a subsequent buyer. Historical data developed by studies conducted at South Dakota State University Economics Department have revealed that corn oats and soybeans have been hedged successfully on the futures market by some farmers and elevator managers. Futures contracts for the above grains can be sold the year around on the commodity exchanges. Selected examples included: (1) making a preharvest sale before the crop is planted or while the crop is growing; and (2) when harvest is completed hedge the grain in storage while anticipating a storage payment. This thesis is devoted to investigating alternative methods for marketing hard red spring and winter wheat most of which is usually sold or stored during the harvest period. This objective will be pursued by analyzing the cash to future price relationships for the various protein percent levels of wheat traded on the commodity exchanges. Emphasis will be placed on analyzing the use of futures markets to attain a maximum average price for wheat while incurring minimum speculation before the crop is planted, while the crop is growing or held in storage. Further analysis will be devoted to determining the most favorable time periods (if any) to contract and close out a hedge for wheat on the futures market.

Library of Congress Subject Headings

Wheat -- South Dakota
Wheat trade -- South Dakota

Format

application/pdf

Number of Pages

112

Publisher

South Dakota State University

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