The Effects of the Micro-Market Structure for Kansas Grain Elevators on Spatial Grain Price Differentials

Corn and wheat cash prices in Kansas are affected by a number of local supply-demand, market structure, transportation access and other factors. Kansas corn prices in 2008 were affected by form of business organization, local feedgrain production and livestock feed usage, elevator storage capacity, access to railroad grain handling facilities, and to a limited degree by the number of competitors in local markets. Geographic proximity to grain ethanol plants did not have a positive impact on local corn prices, although a number of mitigating factors may exist. Kansas wheat prices in 2008 were affected by local wheat production, elevator storage capacity, the number of competitors in local markets, and by location relative to flour mills. Evidence of operating cost and efficiency differences among grain elevators indicate the presence of market power in local Kansas grain markets.