•  
  •  
 

Bulletin

Abstract

Demand conditions being equal, the market with the lowest freight cost is in a position to make the highest bid to the local shipper in a given surplus area. Changing crop conditions, however, may create demand for feed grains in territories normally not in the market. When such demands arise the market serving the deficit areas must bid equal to, or above, the market with the favorable freight cost in order to draw grain from an equal or slightly higher freight cost area.

When production in the western feeding area, served by Kansas City, falls to or below 82 percent of normal, Kansas City is forced to bid from 1 to 5 cents above Chicago to draw corn from north central Iowa where freight rates are equal to both markets. In years when production in the western area reaches this low level the price differential usually exists for a period of 12 to 14 months, from mid-summer of the small crop year to mid-summer of the following crop year.

Share

COinS
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.