Short-Run Supply of Services. The Case of Soybean Processing

Some Basic Problems of Research into Competition in Agricultural Markets

“…Thus, for example, the market price for a spot bushel of soybeans plus the interest cost on the soybean investment over the processing interval, when subtracted from the concurrent price for the bushel-equivalent of soybean oil and soybean meal deliverable at the end of the processing interval, is the market price for soybean milling services per bushel (Paul 1966, Paul andWesson 1966). Similarly, the price for a spot feeder-steer plus a spot bundle of feed sufficient to turn the feeder into a fed steer at the end of the feeding period, plus interest on the investment in feed and feeder over the period, when subtracted from the concurrent price for a fed steer deliverable at the end of the feeding period, is a market price for the feedlot sevices per animal (Paul and Wesson 1967).…”

“…Similarly, the price for a spot feeder-steer plus a spot bundle of feed sufficient to turn the feeder into a fed steer at the end of the feeding period, plus interest on the investment in feed and feeder over the period, when subtracted from the concurrent price for a fed steer deliverable at the end of the feeding period, is a market price for the feedlot sevices per animal (Paul and Wesson 1967). Similarly, the price for a bushel of spot grain plus the interest cost on the grain investment over the storage period, when sub--tracted from the concurrent price for a bushel of grain deliverable at the end of the storage period, is (when adjusted for convenience yield) a market price for warehousing services per bushel (Paul 1970).…”

Analysis of feeder cattle-corn-fed cattle market arbitrage profit opportunities and pricing strategy alternatives

“…The lock in margins were tested at 3 levels, $10, $15, and $20 per head. The cash market strategy resulted in the ^Paul (1966) and Paul and Wesson (1966) discussed the use of 2-way hedges by soybean crushers. The crushers could lock in crushing margins by taking a long position in soybean futures and short positions in soybean mean and oil futures.…”

Some theoretical considerations for futures trading in commodities requiring transformation services: the case of live beef futures

“…Thus, the difference between the current cash price for grain and the price for delivery at some future date Is Interpreted as the market price of storage. When processing Is Involved, as for soybeans,the price spread between spot soybeans and forward soybean products is seen as the market price for the required storage and processing services[97]. In the case of cattle, spread between cash prices for feeders and feed and future prices for fed cattle represents the market price for feedlot services[96].…”