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Has the Market's Estimate of Crop Price Variability Increased since the 1996 Farm Bill?

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  • Carl R. Zulauf
  • E. Neal Blue
Abstract
Following enactment of the 1996 Farm Bill, corn and soybean implied volatilities covering the preharvest and storage seasons increased 16–23% between 1987–1995 and 1997–2001. The increase was statistically significant at the 90% confidence level. Standard deviation of corn and soybean prices derived from the implied volatilities increased 7–25%, but only the increase for preharvest corn was statistically significant. Further muddling the picture is the decline in variability of annual U.S. average corn and soybean cash price. These mixed findings point to continuing disagreement about government's role in managing farm risk in the post-1996 Farm Bill world.

Suggested Citation

  • Carl R. Zulauf & E. Neal Blue, 2003. "Has the Market's Estimate of Crop Price Variability Increased since the 1996 Farm Bill?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 145-153.
    • Handle: RePEc:oup:revage:v:25:y:2003:i:1:p:145-153.
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    File URL: http://hdl.handle.net/10.1111/1467-9353.00050
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    References listed on IDEAS

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    1. Collins, Keith J. & Glauber, Joseph W., 1998. "Will Policy Changes Usher In a New Era of Increased Agricultural Market Variability?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 13(2), pages 1-4.
    2. Paul L. Fackler & Robert P. King, 1990. "Calibration of Option-Based Probability Assessments in Agricultural Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 73-83.
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    Cited by:

    1. McPhail, Lihong Lu & Babcock, Bruce A., 2012. "Impact of US biofuel policy on US corn and gasoline price variability," Energy, Elsevier, vol. 37(1), pages 505-513.
    2. Elanor Starmer & Aimee Witteman & Timothy A. Wise, "undated". "Feeding the Factory Farm: Implicit Subsidies to the Broiler Chicken Industry," GDAE Working Papers 06-03, GDAE, Tufts University.

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