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- W2232861567 abstract "During most of 2005-10, the price of expiring U.S. corn, soybeans, and wheat futures contracts settled much higher than corresponding delivery market cash prices. Because futures contracts at expiration are commonly thought to be equivalent to cash grain, this commodity price non-convergence appeared inconsistent with the law of one price. In addition, sustained non-convergence concerns market participants, exchanges, and policymakers because it can make hedging less effective, send confusing signals to the market, threaten the viability of a contract, and ultimately lead to a misallocation of agricultural resources. This report summarizes prominent theories that have been offered to explain non-convergence, including a new model that explains how the structure of a competitive delivery market can generate a positive expiring basis. The data support this delivery market theory over alternative explanations. Finally, we discuss various policy levers that have been offered to address non-convergence, as well as their likely impacts." @default.
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- W2232861567 date "2013-08-01" @default.
- W2232861567 modified "2023-09-23" @default.
- W2232861567 title "Non-Convergence in Domestic Commodity Futures Markets: Causes, Consequences, and Remedies" @default.
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- W2232861567 doi "https://doi.org/10.22004/ag.econ.155381" @default.
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