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Price Risk Reduction in Marketing Corn From Using Hedging Strategies

Author

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  • Kane, Michael A.
  • Beierlein, James G.
  • Dunn, James W.

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.

Suggested Citation

  • Kane, Michael A. & Beierlein, James G. & Dunn, James W., 1983. "Price Risk Reduction in Marketing Corn From Using Hedging Strategies," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 12(1), pages 1-4.
    • Handle: RePEc:ags:nareaj:159521
    DOI: 10.22004/ag.econ.159521
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    File URL: https://ageconsearch.umn.edu/record/159521/files/Price%20risk.pdf
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    References listed on IDEAS

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    1. Purcell, Wayne D. & Riffe, Don A., 1980. "The Impact Of Selected Hedging Strategies On The Cash Flow Position Of Cattle Feeders," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 12(1), pages 1-9, July.
    2. Beilock, Richard P. & Dunn, James W., 1980. "An Application Of The Box-Jenkins Approach To Forecasting The Cold Storage Of French Fries," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(2), pages 1-5, October.
    3. Beilock, Richard P. & Dunn, James W., 1980. "An Application Of The Box-Jenkins Approach To Forecasting The Cold Storage Of French Fries," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-5, October.
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    Cited by:

    1. Markus Arlindo Monteiro & Bennie Grové & Nicolette Matthews, 2022. "Developing a Moving Average Crossover Strategy as an Alternative Hedging Strategy for the South Africa Maize Market," Agriculture, MDPI, vol. 12(8), pages 1-14, August.

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    Agricultural Finance; Marketing;

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