Corn Market Research Articles

Operational Impacts of the Changes in the Corn Futures Contract of the BM&F Bovespa Regarding Risk Mitigation

The corn market plays an important role in the national agricultural scenario, given its relevance in the meat industry, where grain marketing strategies are outstanding, especially those related to price risk mitigation using futures contracts. This article aims to identify and interpret the effects of the changes of the corn futures contract traded at the BM&F-Bovespa, which shifted in September 2008 from physical delivery to cash settlement, on the grain futures market performance. We evaluated contract liquidity, volatility of future and physical corn prices, and base convergence. The possible effects of the contract amendment include the increase in liquidity of the corn futures contract, reduction of the price volatility and improved base convergence. The results are in line with the theory and highlight the positive impact of implementing cash settlement for corn futures.Key words: Cash settlement. Futures contracts. Corn. BM&F-Bovespa.

An analysis of bundle pricing: the case of biotech seeds

AbstractBiotechnology has provided opportunities for strategic management and pricing of patented products. This article analyzes the economics and strategy of bundling and bundle pricing of biotech traits in seeds. When the bundling of genes/traits is decided by biotech firms, firms may choose among subadditive pricing, component pricing, or superadditive pricing strategies. We argue that complementarity among component genes contributes to subadditive pricing, while substitution among components contributes to superadditive pricing. The nature of bundle pricing is explored empirically using U.S. seed corn data from 2000 to 2007. We document that subadditive bundle pricing of traits is commonly found in the seed corn market. However, we also present evidence of superadditive pricing and component pricing. The presence of different pricing and bundling strategies suggests a rapidly advancing and complex market. The preponderance of subadditive pricing suggests that trait bundling offers benefits to farmers exhibiting strong demand for multiple complementary genetic traits.

Gazdasági Hatástanulmány a Pannonia Ethanol Dunaföldvár és a Pannonia Ethanol Mohács Bioetanol üzemekhez (Economic Impact Study of Pannonia Ethanol Dunafoldvar and Pannonia Ethanol Mohacs)

Gazdasági Hatástanulmány a Pannonia Ethanol Dunaföldvár és a Pannonia Ethanol Mohács Bioetanol üzemekhez (Economic Impact Study of Pannonia Ethanol Dunafoldvar and Pannonia Ethanol Mohacs)

The effect of ethanol listing on corn prices: Evidence from spot and futures markets

The use of corn for ethanol has been the topic of heated discussions in the media and among policy makers. As part of this debate, some observers have argued that the use of corn in the production of ethanol has had adverse effects on corn prices. This paper contributes to this reviving debate by examining the impact of the listing of ethanol futures in the Chicago Board of Trade on the spot and futures prices for corn. We find a significant listing effect, indicating that the listing of ethanol has had a positive contribution to both price and volatility in the corn market, especially in the spot and the shorter maturity futures contracts, and mostly through its interaction with trading volume in the corn market. We discuss the policy implications of the findings for investors and its relevance for the ongoing debate on US energy policy. We conclude with some suggestions for future research.

Will the development of bioenergy in China create a food security problem? Modeling with fuel ethanol as an example

Abstract This paper uses fuel ethanol from corn as an example to establish a theoretical model and framework to explore possible impacts of developing bioenergy on food security in China under short run and long run dynamic equilibriums with import supplements. From the three aspects including “fighting for food with people”, “fighting for land with food”, and international trade safety, the conditions that create food safety problems are discussed. In a closed economy, when the decrease in direct or indirect demand for corn caused by corn price rise is larger than the demand increase due to income increase, or when corn demand increase caused by fuel ethanol price rise is larger than the corn demand decrease caused by the decrease in government price subsidy for fuel ethanol, food security problem will appear. Food security problem can be solved by implementing trade policy when a stable import source is available. Otherwise the subsidies, substitutes, technology, etc. should be used to increase the rate of self-supply. Moreover, considering the status quo of corn market, the paper puts forward a set of policies of income and price subsidy, substitutes, and trade and technology to solve the problems.

'A Bad Chicken was Brooding': Subversive Speech in Late Medieval Flanders*

In March and April 1477, the guilds of Ypres were in open revolt. They took advantage of the defeat and death at Nancy of Charles the Bold, count of Flanders and duke of Burgundy, to start a rebellion against the ruling patrician class and demand the restitution of privileges that had been abolished in earlier decades. Burgundian power was weak as the French king attacked its territory, and the new countess of Flanders, Charles's daughter Mary of Burgundy, did not have the means to suppress revolts in Ghent, Bruges, Ypres and other cities and towns in the Low Countries. In Ypres, guild leaders took control of the urban government and several of the privileges favourable to the craft guilds were restored. Once the Burgundian court had recovered and Mary of Burgundy had married Maximilian, the Habsburg archduke of Austria, the central power retaliated. In a joint action with the urban elite of Ypres in the autumn of 1477, the ruling dynasty started an in-depth investigation into the circumstances of the revolt's outbreak in order to punish its leaders. The prosecutor wanted to know not only what exactly had happened, but also what the rebels had said to each other before the rebellion had started. At some point, one Jan Wouterman, a draper, confessed that he had overheard two other men, Ghislain and Maylin Everaert, in conversation at the Ypres Corn Market. They had said they knew where ‘a bad chicken was brooding’ (‘een quaet kiekin broedde’). Wouterman was referring to some apprentice weavers who had secretly assembled in an inn at the market square around three tables, declaring that they would not take up work again until they had regained the old privileges.1

PROCAMPO, the Mexican corn market, and Mexican food security

PROCAMPO (Program for Direct Assistance in Agriculture or Programa de Apoyos Directos al Campo) is an income transfer payment to Mexican farmers that compensates them for subsidies received by foreign competitors. Corn (Zea mays) has received the largest amount of PROCAMPO payments and is the primary component of Mexico’s food and feed supply. Results of a spatial and temporal model show that without PROCAMPO, Mexican annual average corn production would have been lower and corn imports would have been 40.5% higher in 2005–2007. Increased producer and consumer surplus and savings from reduced imports reveal that the benefits of PROCAMPO were higher than the program’s costs. Greater PROCAMPO support would decrease Mexican corn imports and increase domestic corn production. It is recommended that PROCAMPO payments to corn producers be continued and increased in the interest of Mexican national food security.

Corn Market Waiting on August Production Report

Corn Market Waiting on August Production Report

USDA Reports Sink The Corn Market

USDA Reports Sink The Corn Market

Corn Market Continues to Focus on Production Prospects

Corn Market Continues to Focus on Production Prospects

Variance risk premiums and predictive power of alternative forward variances in the corn market

AbstractWe propose a fear index for corn using the variance swap rate synthesized from out‐of‐the‐money call and put options as a measure of implied variance. We find negative and time‐varying variance risk premiums (realized variance minus implied variance) in the corn market from 1987 to 2009. Our results contrast with Egelkraut, Garcia, and Sherrick (2007), but are in line with the findings of Simon (2002). We conclude that our synthesized model‐free implied variance estimation procedure contains superior information about future realized variance relative to traditional model‐dependent estimating procedures: the implied variance model by Black (1976) and the seasonal GARCH(1, 1) forecasted variance model. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark 32:587–608, 2012

The coastal metropolitan corn trade in later seventeenth‐century England1

Exploiting hitherto unexamined London port book data, this article shows that during the last quarter of the seventeenth century the coastal metropolitan corn import trade was twice the size that historians relying on the work of Gras have assumed it to have been. More significantly, it demonstrates that Gras's failure to examine the capital's grain trade other than in terms of aggregate corn imports has disguised the nature and extent of its contribution to the development of the London economy. By the 1680s, the coastal trade comprised two distinct strands of roughly equal size: one providing food and drink for the London population, the other fuelling the overland trade of the capital. It is argued that the former was unnecessary for the provision of the city other than in barren years, but that the latter may have been indispensable for the development of the overland transport infrastructure of the metropolitan region at the height of the late seventeenth-century commercial revolution. Thanks largely to the agency of southern English mariners commanding large coasters, London's demand for fodder crops after the mid-1670s drew most of the coast stretching from Berwick to Whitehaven into the orbit of the metropolitan corn market.

Distribution Pattern and Corn Marketing Efficiency in South Lampung Regency

Background of the study is a corn ’s production in Lampung province is high, but some companies of cattle feed is still lack of corn stock . This study aims to find out the distribution patterns and marketing channels to analyze the efficiency of corn marketing in South Lampung regency. This study was conducted in Ketapang and Natar districts. Respondents of this study were 51 corn farmers , 11 traders and 3 consumers. Respondents were taken using Simple Random Sampling and Snowball Sampling method. Th is study uses distribution pattern analysis, marketing margins analysis and price elasticity transmissions analysis. Data collection was done by in-depth interviews and expressed both qualitatively and quantitatively . The study was conducted in September-November 2009. The results showed that 22, 48 percent of the corn in South Lampung distributed out Lampung and marketing of corn in South Lampung regency was still not efficient. Key words: distribution pattern , marketing efficiency, corn

ELASTICITY OF CORN PRICE TRANSMISION AND ITS IMPLICATION TO FARMERS

Corn has important roles to Indonesian economy both for staple foods and for price transmission to other products. The high domestic demand for corn compared to its domestic production has made corn imports continue to grow. This research is aimed to know the elasticity of price transmission and its implication to corn’s farmers. The results of analysis show that corn price transmission is inelastic. The coefficient shows that corn market is oligopsony under the imperfect competition market. To help the corn farmers, the government has to provide fertilizer subsidy and farm credit with low interest rates, as well as impose import tariff on corn. Keywords: Corn, Elasticity of price transmission, oligopsony, imperfect competition market JEL classification numbers: Q00, Q12, Q18

米国におけるバイオエタノール混合率引き上げが国際とうもろこし需給に与える影響

The production and utilization of biofuel is promoted in the U.S., and it is estimated that the U.S. biofuel market will continue to expand in the future. The Environmental Protection Agency (EPA) decided partially waiver to allow gasoline that contains up to 15 volume percent bioethanol (E15) for certain motor vehicles on October 13, 2010. EPA approved the waiver for 2007 and newer passenger cars, light trucks including sports utility vehicles (SUV). This study uses dynamic partial equilibrium model to examine how the increasing U.S. bioethanol blend ratio on the world corn market. The baseline projection is based on a series of assumptions about the general economy, agricultural policies, and technological growth in all countries and regions during the projection period. In addition to this, it is assumed that gasoline stations in Mid-West states would install E15 equipments for certain vehicles. This study supposes two scenarios to compare with baseline scenario. If the U.S. government doesn't grant the waiver, world corn price would decrease by 1.10% in 2011/12 and 4.14% in 2020/21. In addition to this, if gasoline stations in all U.S. states install E15 equipments, world corn price will increase by 5.03% in 2011/12 and 14.01% in 2020/21. The results of this study indicate that the increasing of U.S. bioethanol blend ratio will impact on the world corn market and their impact will increase gradually from year to year.

ANALISIS PERDAGANGAN JAGUNG INDONESIA

Corn has a strategic role and economic value in Indonesia, and has to be developed due to its position as the main source of carbohydrate and protein, raw material for food, feed, and biofuel industry. Aimed this research to determine the position of Indonesian com competitiveness in the international market in know the comparative advantage of Indonesian corn;factors that influence Indonesian com demand, and the integration between Indonesian corn market and the world com market. This research applys descriptive method The data used are time series data sourced from FAO, National Statistic Agency (BPS), and World Bank. Competitiveness is measured by the parameters of Revealed Comparative Advantage, Trade Specialist Ratio, Acceleration Ratio, and Market Penetration Index. The RCA, TSR, and AR analysis used data year 1988-2008, the MPI analysis used data year 1995-2008. Indonesian import corn demand is analyzed by OLS (ordinary least squares) multiple regression in the form of natural logarithm using data year 1980-2008, while market integration is analyzed by the unit root test, co-integration test, and Granger causality test using data year 1961-2008. The results shows that 1) the Indonesian corn competitiveness is low caused by the low production of Indonesian com; 2) Indonesian import corn demand is positively affected by the price of imported com and GDP of Indonesia, and negatively affected by the price of imported soybean and imported rice. Imported soybeans are complements of cornfor feed, while imported rice is the substitute of com for feed,' 3) There is no integration between the Chinese market and the Indonesian market because China is a country which re-export corn, there is integration between the United States market and the Indonesian market, as well as between Argentina's market and Indonesian market, but there is no causal relationship. The United States and Argentina market is not a dominant (leading) market in pricing of Indonesian Corn.market.

Corn ethanol growth in the USA without adverse foreign land‐use change: defining limits and devising policies

AbstractThis study addresses the question: ‘How does a 15 billion gallon per year renewable fuel standard (RFS) compare to the capacity of the US corn market to generate necessary input supplies for the ethanol industry?’ The analysis accounts for adjustments in world corn and soybean markets, including corn technology improvements (yield increases) that allow substantial production growth on the existing corn area, and byproduct (DDG) replacement of displaced corn‐feed demand. Our midpoint estimate suggests that increased production on foreign lands only accounts for a small fraction (6%) of the RFS demand expansion. Further, corn yield response to moderate price increases would likely offset much of the foreign production increase. US policies that could sever any remaining link between US ethanol expansion and environmentally sensitive regions of the world feed economy are discussed. Copyright © 2010 Society of Chemical Industry and John Wiley & Sons, Ltd

Impact of renewable fuels standard ethanol mandates on the corn market

AbstractSince 2002, the Renewable Fuels Standard has established mandated levels of ethanol blending in gasoline. Mandated ethanol use represents an important component of ethanol demand. Thus, the ethanol mandates influence derived demand for corn. This work investigates the potential impact of ethanol mandates on equilibrium corn prices and quantities, focusing on how the mandates influence market participant expectations. Results illustrate that due to the stochastic nature of supply and demand shocks, even a mandate that is technically nonbinding can have a substantial impact on corn prices and quantities through the mandate's impact on the price‐responsiveness of demand from the ethanol sector. [JEL classifications: Q13, Q42, Q48]. © 2010 Wiley Periodicals, Inc.

Effects of Bio-ethanol Production on the U.S. Corn Market

Effects of Bio-ethanol Production on the U.S. Corn Market

Fatores de influência no preço do milho no Brasil

Compreender a dinâmica de funcionamento do mercado de milho brasileiro, procedendo a uma investigação dos fatores que afetam as quantidades e preços nesse mercado, é o objetivo deste trabalho. Os testes de raiz unitária foram feitos utilizando-se a metodologia DF-GLS - Dickey Fuller Generalized Least Square - e os de cointegração de Johansen (1988). O modelo estimado, de ajuste pelo preço, foi um Modelo de Autorregressão Vetorial com Correção de Erros - VEC, sendo a identificação feita pelo procedimento de Sims-Bernanke. O estudo permite afirmar que existe forte interação entre os mercados de milho e de soja, mostrando uma relação de complementaridade na oferta e substitutibilidade na demanda, e que fatores macroeconômicos como renda e juros são importantes na determinação dos preços do milho ao produtor e no atacado. Vale ressaltar que os preços externos do milho mostraram relativa importância no processo de formação do preço doméstico do grão.