A study of forward contracting of cotton by Arizona farmers

The main objective of this study was to investigate the benefits accruing to Arizona cotton producers from forward contracting as a recently introduced marketing method. The study is based on a sample data that covered four counties over the 1974 through the 1979 seasons. The sample data consisted of a number of forward contracts that were written during the six cropping seasons. Based on the information in the contracts, the sample data were grouped into six sub-samples by contract types. Within each contract type, the contracts were arranged according to the dates on which they were written and a comparison was made between the prices of the paired contract types to verify whether the prices of the paired contract types were the same or different. Analysis of variance and the Least Significant Difference Test were the main statistical procedures used to achieve this objective. A simple graphical presentation was used to show the relationship between the prices of the December futures contracts and forward contracts as two distinct marketing methods. Since they have other alternatives for marketing their cotton, it would be appropriate to compare the gross returns from forward contracting to the gross returns from spot sales at Phoenix on the first week of December of the year in which the crop was grown

AZU_TD_BOX294_E9791_1981_129.pdf (1.54 MB)

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