Hostname: page-component-cb9f654ff-h4f6x Total loading time: 0 Render date: 2025-09-01T07:44:08.001Z Has data issue: false hasContentIssue false
  • English
  • Français

Price Risk Reduction in Marketing Corn from Using Hedging Strategies

Published online by Cambridge University Press:  10 May 2017

Michael A. Kane ,
James G. Beierlein  and
James W. Dunn
Michael A. Kane
Affiliation:
The Pennsylvania State University
James G. Beierlein
Affiliation:
The Pennsylvania State University
James W. Dunn
Affiliation:
The Pennsylvania State University
Get access

Abstract

The use of hedging with commodity futures markets to reduce the price risk in corn production is examined. Both intra-year and inter-year risk are evaluated with different hedging strategies. Strategies involve no hedge, hedge and hold, controlled hedge placement and hold, and in and out hedging. Both technical and forecasting criteria are used to place hedges in the more active strategies. Substantial risk reduction is possible, often without a reduction in price received. Considerable basis risk diminishes the risk reducing properties of a hedge and hold strategy.

Information

Type
Articles
Information
Journal of the Northeastern Agricultural Economics Council , Volume 12 , Issue 1 , Spring 1983 , pp. 49 - 52
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Abshere, Shaun K., Dunn, James W. and Louis Moore, H. “Grain Movements to and From Pennsylvania Grain Handling and Processing Firms, 1977,” AE & RS 155, Pennsylvania State University, 1981.Google Scholar
Anderson, O. D. Time Series Analysis and Forecasting: The Box-Jenkins Approach. Boston: Butterworths, 1977.Google Scholar
Beilock, Richard P. and Dunn, James W. “An Application of the Box-Jenkins Approach to Forecasting the Cold Storage of French Fries,” Journal of the Northeastern Agricultural Economics Council, 9 (1980), 51–54.Google Scholar
Brown, Robert A. and Purcell, Wayne D. Price Prediction Models and Related Hedging Programs for Feeder Cattle. Oklahoma Agricultural Experiment Station Bulletin B-734, January 1978.Google Scholar
Link, William D. Jr. “Quantitative Models to Predict Monthly Slaughter Hog Prices in Conjunction with Related Hedging Strategies,” M.S. thesis, Oklahoma State University, 1976.Google Scholar
Nelson, C. R. Applied Time Series Analysis for Managerial Forecasting. San Francisco: Holden-Day, 1973.Google Scholar
Peck, Anne E. “Hedging and Income Stability: Concepts, Implications, and an Example.” American Journal of Agricultural Economics 57 (1975) 410–19.Google Scholar
Pennsylvania Crop Reporting Service. Pennsylvania Crop and Livestock Annual Summary, Annually, 1973–1982.Google Scholar
Purcell, Wayne D. and Riffe, Don A. “The Impact of Selected Hedging Strategies on the Cash Flow Position of Cattle Feeders,” Southern Journal of Agricultural Economics, 12 (1980): 85–93.Google Scholar
Purcell, Wayne D. and Richardson, Thomas W. Quantitative Models to Predict Quarterly Average Cash Corn Prices and Related Hedging Strategies. Oklahoma Agricultural Experiment Station Bulletin B-731, December 1977.Google Scholar
Rolfo, Jacques. “Optimal Hedging under Price and Quantity Uncertainty: The Case of a Cocoa Producer,” Journal of Political Economy 88 (1980) 100–116.Google Scholar
Tomek, William G. and Gray, Roger W. “Temporal Relationships Among Prices on Commodity Futures Markets: Their Allocative and Stabilizing Roles.” American Journal of Agricultural Economics, 52 (1970), 372–80.Google Scholar