Vol. 76 No. 2 (2021)
Research Articles

Optimal Storage in Brazilian Corn Market: application of a rational Dynamic Model

André Luis Ramos Sanches
Center for Advanced Studies on Applied Economics (CEPEA)
Cassiano Bragagnolo
Department of Economics, Federal University of São Carlos, campus Sorocaba
Geraldo Sant’Ana de Camargo Barros
Department of Economics, Administration and Sociology Luiz de Queiroz College of Agriculture - University of Sao Paulo
Lucilio Rogerio Aparecido Alves
Department of Economics, Administration and Sociology Luiz de Queiroz College of Agriculture - University of Sao Paulo
Published September 24, 2021
Keywords
  • Brazilian corn market,
  • commodity price dynamics,
  • storage model
How to Cite
Sanches, A. L. R., Bragagnolo, C., Sant’Ana de Camargo Barros, G., & Aparecido Alves, L. R. (2021). Optimal Storage in Brazilian Corn Market: application of a rational Dynamic Model. Italian Review of Agricultural Economics, 76(2), 5-15. https://doi.org/10.36253/rea-12018

Abstract

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.

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