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Optimal Storage and Marketing Over Space and Time
Author(s) -
Benirschka Martin,
Binkley James K.
Publication year - 1995
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243220
Subject(s) - commodity , convenience yield , interest rate , economics , microeconomics , space (punctuation) , resource (disambiguation) , agricultural economics , industrial organization , econometrics , financial economics , monetary economics , computer science , market economy , spot contract , computer network , operating system , futures contract
Borrowing from the theory of optimal resource extraction, we develop the mechanism guiding efficient commodity storage and marketing over producing regions through the crop year. Optimal storage occurs at producing areas, and time in storage varies directly with distance to market. Prices grow with interest rates in locations where storage is efficient but more slowly elsewhere, which explains why market prices (i.e., prices at the market) grow more slowly than interest rates. The model is empirically supported by examining storage in the Corn Belt, rates of price growth at various points, and quarterly grain marketings.