Risk and returns from alternative marketing strategies for corn producers
✍ Scribed by Larry J. Martin; David Hope
- Publisher
- John Wiley and Sons
- Year
- 1984
- Tongue
- English
- Weight
- 1020 KB
- Volume
- 4
- Category
- Article
- ISSN
- 0270-7314
No coin nor oath required. For personal study only.
✦ Synopsis
olatility in corn prices during the past decade has significantly increased V the price risk of corn producers. At the same time, the marketing system for corn has offered producers several methods for pricing their product. These include: spot sales, fixed price forward contracts, basis contracts, and hedging in the futures market. Producers also have the option of replacing a speculative position in cash corn with a long positi.on in futures.
Some pricing methods can be used in combination with each other, and the producer faces decisions regarding the timing of pricing. He operates in a risky environment which requires choice among a complex set of marketing alternatives. It is not possible for an individual to test all of these alternatives with experience and arrive at a marketing strategy for his operation. Thus, there is a need to provide information with which producers can develop marketing strategies. This is done here by simulating a wide array of strategies over time.
A marketing strategy, as defined here, has several components:
(a) an objective,' (b) one or a combination of pricing methods, (c) decision rules to determine whether to store, (d) decision rules to determine the time($ at which price is established.
These components represent various issues in the problem of concern for this study. Two basic questions are: Do strategies developed with substantially different objectives accomplish their stated objectives; and, do they have different im- pacts on risk and returns?
'The objective, in many cases, detc!rrnines some or all of the remaining elelnents OF thr stratc'gy.