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An option on the average European futures prices for an efficient hog producer risk management

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Author Info

  • Martial Phélippé-Guinvarc’H

    ()
    (Agricultural Insurance Service of GROUPAMASA, 126 Piazza Mont d’Est, 93199 Noisy Le Grand Cedex et Agrocampus Ouest, UMR1302 SMART, F-35000 Rennes, France)

  • Jean Cordier

    (Agrocampus Ouest, UMR 1302 SMART, 4 allée Adolphe Bobierre - CS 61103, F-35011 Rennes cedex et INRA, UMR 1302 SMART, F-35011 Rennes cedex)

Abstract

The volatility of hog prices is high compared to most agricultural commodities. However, European hog producers do not benefit from any agricultural policy support. Through the continuous production process and induced selling activity on spot markets, producers benefit from a natural moving average product pricing. In addition, asymmetric price risk management is able to increase the expected utility of risk adverse hog producers. But, if there is a futures contract at the European Exchange (EUREX), there is no option market and as a consequence no derivative contracts on the European hog market. The article is presenting how financial intermediaries could offer an innovative derivative contract to complement the “naturall ” steady price of the French hog producers.

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File URL: http://www.raestud.eu/pdf/REAE-91-1-Guinvarch-Cor.pdf
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Bibliographic Info

Article provided by INRA Department of Economics in its journal Review of Agricultural and Environmental Studies.

Volume (Year): 91 (2010)
Issue (Month): 1 ()
Pages: 27-42

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Handle: RePEc:rae:jourae:v:91:y:2010:i:1:p:27-42

Contact details of provider:
Postal: 4, Allée Adolphe Bobierre, CS 61103, 35011 Rennes Cedex
Email:
Web page: http://www.necplus.eu/action/displayJournal?jid=RAE
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Related research

Keywords: price risk; margin risk; hog; futures market; replication portfolio; hedging;

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Cited by:
  1. El Benni, Nadja & Finger, Robert, 2012. "Where is the risk? Price, yield and cost risk in Swiss crop production," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126758, International Association of Agricultural Economists.

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