The Cost of Post-Harvest Forward Contracting in Corn and Soybeans
This study estimates the cost of forward contracting corn and soybeans for January and March delivery from 1980 through 2009. Both corn and soybeans exhibited a downward trend in the cost of forward contracting for January delivery, in contrast to previous pre-harvest results, and the March delivery cost of forward contracting is slightly downward sloped. The cost of post-harvest forward contracting corn and soybeans averaged 2 cents and 6 cents respectively; this was much less than the cost of pre-harvest forward contracting in recent years. We did not find an increase in cost associated with income shifting associated with January delivery. We conclude that January forward contracts offer a relatively inexpensive means of smoothing income across years.