Analysis of Expected Price Dynamics Between Fluid Milk Futures Contracts and Cash Prices for Fluid Milk
AbstractFuture contracts for fluid milk began trading in late 1995 and early 1996. This paper investigates the potential use of fluid milk futures contracts as hedge vehicles for dairy producers in the Upper Midwest and California markets. This is done by developing simulated futures prices for the period 1988 to 1995. The simulated futures prices are used to estimate basis relationships between cash and futures prices for the markets considered. Results suggest that the fluid milk futures contracts could be used to reduce market price risk for producers in the Upper Midwest. Results were less conclusive for California producers.
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Bibliographic InfoArticle provided by Agricultural Economics Association of Georgia in its journal Journal of Agribusiness.
Volume (Year): 15 (1997)
Issue (Month): 2 ()
Fluid milk futures; Contracts; Basis; Dairy markets; Agribusiness; Demand and Price Analysis;
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- Bozic, Marin & Newton, John & Thraen, Cameron S. & Gould, Brian W., 2012. "Mean-reversion in Income over Feed Cost Margins:Evidence and Implications for Managing Margin Risk by U.S. Dairy Producers," Staff Papers 132379, University of Minnesota, Department of Applied Economics.
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