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The Dynamics of Convenience and the Brazilian Soybean Boom
Author(s) -
Frechette Darren L.
Publication year - 1997
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 - 10.2307/1244268
Subject(s) - futures contract , boom , convenience yield , futures market , yield (engineering) , economics , agricultural economics , environmental science , financial economics , spot contract , environmental engineering , materials science , metallurgy
U.S. and Brazilian soybeans are harvested on an alternating semiannual cycle that generates predictable dynamic behavior in the soybean futures market. Because corn and soybeans are storage substitutes, their physical storage costs move together and can be isolated separately from crop‐specific marginal convenience yields along the futures price profile. The Kaldor‐Working convenience yield hypothesis is tested for the international soybean market and storage risk is measured.