Ledger provision in hog marketing contracts
AbstractPrice-dependent loan agreements at low interest rates have sometimes been included in North American hog sector long-term marketing contracts. We show that a general form of this stipulation can be viewed as a hybrid between a forward rate agreement and a bundle of commodity spot options. In some cases, the provision amounts to a commodity swap. These observations provide an approach to valuing the provision. Historical data are used to estimate expected payouts to the producer under the contract feature.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Agricultural Finance Review.
Volume (Year): 66 (2006)
Issue (Month): 1 (May)
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Other versions of this item:
- David A. Hennessy & Donald Lien, 2003. "Ledger Provision in Hog Marketing Contracts," Center for Agricultural and Rural Development (CARD) Publications 03-wp336, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Hennessy, David A. & Lien, Donald, 2003. "Ledger Provision in Hog Marketing Contracts," Staff General Research Papers 10645, Iowa State University, Department of Economics.
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