Optimal Storage in Brazilian Corn Market: application of a rational Dynamic Model
- Brazilian corn market,
- commodity price dynamics,
- storage model
Copyright (c) 2021 André Luis Ramos Sanches, Cassiano Bragagnolo, Geraldo Sant’Ana de Camargo Barros, Lucilio Rogerio Aparecido Alves
This work is licensed under a Creative Commons Attribution 4.0 International License.
This paper aims to analyze the decision regarding corn storage (for the first and second crops) in the current context of the Brazilian market through an economic model of dynamic storage. We consider storage as a competitive economic activity and that agents can maximize profit through rational expectations. Our results provide a comprehensive analysis of how growth in the Brazilian second crop and high level of exports has impacted corn storage dynamics. The export rule suggests increasing exports when availability exceeds 37.3 million tons in the first crop and 56.3 million tons in availability in the second crop. The storage rule suggests that storage formation occurs increasingly in the first crop when supply exceeds 38.1 million tons and 60.9 million tons in the second crop.