The role of product and market characteristics in determining cottonseed prices

Abstract

The general objective of this research was to determine how variations in cottonseed supply, demand, and quality factors affect cottonseed prices in Texas. A hedonic approach was used in analyzing the influence of product as well as market characteristics on cottonseed prices. Results indicate that both the product and market characteristics jointly determine cottonseed prices, and quality premiums and discounts play an important role in price determination. Further, results from this study provide preliminary evidence that the current formula pricing system for cottonseed may be overvaluing the premiums for oil and ammonia and undervaluing the discounts for moisture, free fatty acids, and foreign matter.[L100]