Title page for ETD etd-08222008-063143
|Type of Document
||Hoover, Michael G.
||Corn storage marketing strategies for Virginia
||Master of Science
||Agricultural and Applied Economics
|Kenyon, David E.
|Jones, Eluned C.
|Purcell, Wayne D.
|Date of Defense
The decision between selling corn at harvest or placing corn in storage is
investigated. Six marketing strategies are identified and analyzed based on their ability
to capture profits and avoid losses. The strategies are implemented when expected
profits are positive. The strategies involve storing with no forward pricing and storing
with forward pricing using futures, options and cash contracts. Three regression
models are developed to forecast change in cash prices and basis. The regression
models are incorporated into the strategies to help producers forecast profits and
losses. Cash prices and basis are based on markets in the Northern Neck of Virginia
for the 1974 to 1994 time period. The distribution of returns for each strategy are
analyzed and compared using mean variance analysis and second degree stochastic
dominance. The distribution of returns represent the risk associated with each
strategy. The results indicate four of the six strategies are worth considering. The
strategy with the highest average returns and the highest variance of returns involved
storing com with no forward pricing. The strategy with no forward pricing exhibited
some of the best returns, but exposed the producer to the most risk. A producer faced
no risk if the strategy using cash contracts was implemented. The strategy that
comprised hedging with a futures contract and the strategy that involved buying a put
option and writing a call option exhibited similar returns and risk. Producers can
implement the strategy that exhibits the level of risk he or she is willing to accept. A
computer program is developed to assist the producer in analyzing the four strategies.
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