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Managing Overnight Corn Price Risks: E*Hedging Versus Tokyo

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  • Leuthold, Raymond M.
  • Kim, MinKyoung
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    Abstract

    This study investigates whether U.S. corn merchants can effectively manage the overnight price risk of cash corn purchased after the Chicago Board of Trade closes at 1:15 p.m. on either the electronic Project A market or in the corn contract traded on the Tokyo Grain Exchange. While neither market provides a very effective alternative using traditional measures of analysis, e*hedging on Project A is more effective than hedging in Tokyo. Both could be very effective for those merchants in the market every day. However, trading of corn futures contracts on Project A remains thin and likely illiquid, limiting its usefulness.

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    File URL: http://purl.umn.edu/14718
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    Bibliographic Info

    Article provided by Agricultural Economics Association of Georgia in its journal Journal of Agribusiness.

    Volume (Year): 18 (2000)
    Issue (Month): 3 ()
    Pages:

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    Handle: RePEc:ags:jloagb:14718

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    Postal: 301 Conner Hall, University of Georgia, Athens, GA 30602-7509
    Web page: http://www.agecon.uga.edu/~jab/
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    Related research

    Keywords: corn; e*hedging; electronic markets; futures markets; hedging; overnight price risks; Project A; Tokyo Grain Exchange; Marketing;

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    1. Ederington, Louis H, 1979. "The Hedging Performance of the New Futures Markets," Journal of Finance, American Finance Association, vol. 34(1), pages 157-70, March.
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