Marketing Performance of Oklahoma Farmers

The Marketing Performance of Illinois and Kansas Wheat Farmers

“…The same ordering is present in the market benchmarks computed by Anderson and Brorsen (2005) for wheat in Oklahoma and Hagedorn et al (2005) for corn and soybeans in Illinois. Hence, marketing performance of farmers in these two studies, like the present one, is best versus the 12-month benchmark and worst versus the harvest price benchmark.…”

“…Nonetheless, there is a tendency across crops and states for farmers to store too long relative to the average price offered by the market during harvest. Anderson and Brorsen (2005) suggest this may be due to a psychological bias on the part of crop farmers to hold losing positions too long. It is also possible that crop farmers simply do not fully understand seasonal price patterns.…”

“…Anderson and Brorsen (2005) study the marketing performance of Oklahoma wheat farmers over 1992-2001 using transactions data from three elevators across the state. Their results show that nearly two-thirds of market transactions are in the top half of the price range for a crop.…”

Market Advisory Service Recommendations and Wheat Producers' Selling Decisions

“…Instead, they might be doing the opposite of what the advisory services recommend. Market advisory services have been found to be positive feedback traders, holding when prices rise and selling when prices fall (Sanders et al 1996; Matwichuk 2004), while producers have been found to be negative feedback traders, holding when prices fall and selling when prices rise (Anderson and Brorsen 2005). Most wheat producers in our data set do not appear to base their marketing decisions on trend‐following analysis.…”

“…Market advisory services and sentiment indices have been found to follow price trends in the manner of positive feedback traders, meaning that they recommend holding when prices increase (Sanders et al 1996; Matwichuk 2004). Producers, on the other hand, are typically thought to be negative feedback traders, selling after prices increase (Sanders et al 1996; Anderson and Brorsen 2005). Aside from fundamental and technical strategies, producers could base their marketing decisions on noninformation, known as noise trading (Black 1986), or they could use mechanical marketing strategies that involve selling at the same time every year regardless of the market (i.e., selling at harvest).…”