Hostname: page-component-cd9895bd7-jkksz Total loading time: 0 Render date: 2024-12-26T20:28:59.387Z Has data issue: false hasContentIssue false
  • English
  • Français

A Study of the Economic Functions of the Maine Potato Futures Market

Published online by Cambridge University Press:  10 May 2017

Jeff Sooy  and
Ben Branch
Jeff Sooy
Affiliation:
Department of General Business and Finance, University of Massachusetts
Ben Branch
Affiliation:
Department of General Business and Finance, University of Massachusetts
Get access

Abstract

In an update and extension of prior work this study found that the potato futures markets continued to provide very unreliable forecasts of subsequent spot prices. On the other hand and contrary to some past studies an extensive study here failed to turn up any convincing evidence of a cobweb pricing relationship. Moreover the increasing volatility of potato futures prices in the more recent time period raises questions regarding their value as hedging vehicles. Finally it is argued that the market's efficiency might be improved by expanding the current Maine potato contract to permit delivery of round white potatoes grown outside Maine.

Type
Research Article
Information
Journal of the Northeastern Agricultural Economics Council , Volume 9 , Issue 1 , April 1980 , pp. 51 - 61
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We would like to thank Bill Tomek, Ann Peck and several unnamed referees for their helpful comments.

References

“A Fresh Eye on Potato Futures.” Business Week. July 2, 1979, 84.Google Scholar
Commodity Exchange Authority. Futures Trading in Potatoes, 1954–55. USDA, Washington, D.C., November 1955.Google Scholar
Commodity Exc Authority. Commodity Futures Statistics. Annual issues. 1940–41 to 1971–72.Google Scholar
Commodity Exc Authority. Commitments of Traders in Commodity Futures. Monthly issues. 1972–1974.Google Scholar
Commodity Exc Authority. Surveys of potato futures issued under various titles, 1955–1965 and 1970.Google Scholar
Commodity Futures Law Reports. Commodity Exchange Act Extension and Amendments. November 1975, Pt. II, Commerce Clearing House, Inc., June 26, 1978.Google Scholar
Commodity Futures Trading Commission. New York Mercantile Exchange. Proposed Maine Potato Contract. Transcript of Proceedings at Presque Isle, Maine, July 26, 1976.Google Scholar
Commodity Futures Trading Commission. Trading in Maine Potato Futures Contract. Transcript of Public Hearing at Presque Isle, Maine, May 9, 1979.Google Scholar
d’Arge, Ralph C., and Tomek, William G. Concepts and Consequences of Hedging Long Island Potatoes. Cornell University A. E. Res. 166, March 1975.Google Scholar
Emerson, Peter M., and Tomek, William G. “Did Futures Trading Influence Potato Prices?” Amer. J. Agr. Econ. 51(1969): 666–72.Google Scholar
Estes, Edmund, Blakeslee, Leroy, and Mittelhammer, Ronald. “U.S. Potato Demand: Static and Dynamic Characteristics.” Paper presented at annual meeting of the American Agricultural Economics Association, Pullman, Washington, July 29-August 1, 1979.Google Scholar
Fama, Eugene. Foundations of Finance. New York: Basic Books, 1976.Google Scholar
Gomex, D. “Shipments of Maine Potatoes Fail to Make the Grade, So Futures Trading is Halted.” Wall Street Journal. March 12, 1979, p. 28.Google Scholar
Gray, Roger W “The Attack Upon Potato Futures Trading in the United States.” Food Res. Inst. Studies. 4(1964): 97–122.Google Scholar
Gray, Roger W. “The Futures Market for Maine Potatoes: An Appraisal.” Food Res. Inst. Studies. 11(1972): 313–41.Google Scholar
Gray, Roger W. “Onions Revisited.” Journal of Farm Economics. 45 (1963): Reprinted in A. Peck, editor Selected Writing in Futures Markets. Chicago Board of Trade. Chicago, 1977, 325–328.Google Scholar
Gray, Robert W. “The Characteristic Bias in Some Thin Futures Markets.” Food Res. Inst. Studies 1, 3, 1960.Google Scholar
Gray, Roger W. and Tomek, William G. “Temporal Relationships Among Futures Prices: Reply.” Amer. J. Agr. Econ. 53(1971): 362–66.Google Scholar
Gray, Roger W. and Rutledge, D. J. S. “The Economics of Commodity Futures Markets: A Survey.” Rev. Mktg. and Agr. Econ. Sydney: Australia, December 1971.Google Scholar
Gray, Roger W., Sorenson, V. L. and Cochrane, W. W. An Economic Analysis of the Impact of Government Programs on the Potato Industry of the U.S. Univ. of Minnesota Agr. Exp. Sta. Tech. Bull. 211, 1954.Google Scholar
Hee, Olman. Demand and Price Analysis for Potatoes. USDA Tech. Bull. 1380, July 1967.Google Scholar
Jackewicz, S. “Big Flap About Potato Futures Defaults Isn't Over Despite Settlement Price Move.” Wall Street Journal, June 29, 1976, p. 16.Google Scholar
Johnson, Aaron C. Jr. “Whose Markets? The Case for Maine Potato Futures.” Food Res. Inst. Studies. 11(1972): 293–312.Google Scholar
Johnson, Aaron C. Jr. Effects of Futures Trading on Price Performance in Cash Onion Markets. 1930–1968. USDA, ERS. Tech. Bull. No. 1470, February 1973.Google Scholar
Merchant, C. H. Uses Maine Potato Growers Make of the New York Mercantile Exchange. Maine Agr. Exp. Stat. Bull. 567, Nov. 1957.Google Scholar
Murphy, H. J., et al. Potato Variety Trials for 1978. Univ. of Maine Agr. Exp. Sta. Bull. 757, May 1979.Google Scholar
Olson, Wayne L. The Extent and Price Effects of Floor Trading in the New York Mercantile Exchange Potato Futures Market. USDA, CEA, June 1970.Google Scholar
Paul, Allen B. Treatment of Hedging in Commodity Market Regulation. USDA, Tech. Bull. No. 1538, April 1976.Google Scholar
Paul, Allen B. “Comments on the Kansas City Board of Trade Proposal to Permit Futures Trading in a 30-Industrial Stock Average.” In Commodity Futures Trading Commission, Hearings Washington, D.C., October 25–26, 1978.Google Scholar
Paul, Allen B., Heifner, Richard G. and Helmuth, John. Farmers’ Use of Forward Contracts and Futures Markets. USDA, Agr. Econ. Report No. 320, March 1976.Google Scholar
Potato Facts: Product Costs. Commodity Economics Division, ESCS, USDA, Winter 1979, mimeo.Google Scholar
Peck, Anne. “Hedging and Income Stability: Concepts, Implications, and an Example.” Readings in Futures Markets Book II. Chicago Board of Trade, 1977, pp. 237–252.Google Scholar
Schwartz, Anita M. Futures Trading in Maine Potatoes. Market Survey Report No. 2, Commodity Exchange Authority, U.S. Dept. of Agr., Washington, May 1971.Google Scholar
Simons, Will M. An Economic Study of the U.S. Potato Industry. USDA Agr. Econ. Rep. No. 6, March 1962.Google Scholar
Tomek, William G., and Gray, Robert W. “Temporal Relationships Among Prices on Commodity Futures Markets: Their Allocative and Stabilizing Roles.” Amer. J. Agr. Econ. 52(1970): 372–80.Google Scholar
U.S. Congress. 84th, 1st Session, House. Hearings Before a Subcommittee of the Committee on Agriculture and Forestry. December 6–7, 1955.Google Scholar
U.S. Congress. 85th Congress, 1st Session, House. Hearings Before the Committee on Agriculture and Forestry. May 1–3, 1957.Google Scholar
U.S. Congress. 1st Session, Senate. Hearings Before a Subcommittee on Agriculture and Forestry. August 12, 1957.Google Scholar
U.S. Congress. 2nd Session, Senate. Hearings Before the Committee on Agriculture and Forestry. March 22–26, 1958.Google Scholar
U.S. Congress. 2nd Session, House. Prohibit Trading in Potato Futures, Hearings Before the Subcommittee on Domestic Marketing of the Committee Agriculture. April 29–30, May 28, June 18 and 19, 1958.Google Scholar
U.S. Congress. 88th Congress, 1st Session, Senate. Irish Potato Futures Trading, Hearing Before a Subcommittee of the Committee on Agriculture and Forestry. September 30, 1963.Google Scholar
U.S. Congress. 1st Session, House. Prohibit Trading in Irish Potato Futures on Commodity Exchanges. Hearings Before the Subcommittee on Domestic Marketing of the Committee on Agriculture. April 8–10, 1963.Google Scholar
U.S. Congress. 92nd Congress, 2nd Session, House. Prohibit Trading in Irish Potato Futures on Commodity Exchanges, Hearings Before the Subcommittee on Domestic Marketing and Consumer Relations of the Committee on Agriculture. January 20 and 21, March 16 and 17, 1972.Google Scholar
U.S. Congress. 95th Congress, 2nd Session, Senate. Reauthorization of The Commodity Futures Trading Commission. Report of the Committee on Agriculture, Nutrition, and Forestry. 1978.Google Scholar
U.S. Department of Agriculture, Agricultural Marketing Service. Fresh Fruit and Vegetable Wholesale Market Prices. Annual and Daily issues for major eastern cities.Google Scholar
U.S. Department of Agriculture. Fresh Fruit and Vegetable f.o.b. Prices. For major producing areas, annual and daily issues.Google Scholar
U.S. Congress. 96th, 1st session, Senate. Potato Futures Study. Report to the Committee on Agriculture, Nutrition and Forestry. 1979.Google Scholar
Wesson, William T. The Economic Importance of Futures Trading in Potatoes. USDA Mktg. Res. Rep. No. 241, June 1958.Google Scholar
Working, Holbrook. “Speculating on Hedging Markets.” Food Res. Inst. Studies. 1(1960): 13–24.Google Scholar
Working, Holbrook, “Futures Markets Under Renewed Attack.” Food Res. Inst. Studies. 4(1963): 13–24.Google Scholar
Young, R. and Tomek, W. “A Comparison of Marketing Strategies for Potatoes in Upstate New York.” Cornell Agricultural Economic Staff Papers. No. 78–15. June 1978.Google Scholar