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Using Private Risk Management Instruments To Manage Counter-Cyclical Payment Risks Under The New Farm Bill

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Author Info

  • Anderson, John D.
  • Coble, Keith H.
  • Miller, J. Corey

Abstract

This research evaluates whether or not hedging strategies using call options on the New York Board of Trade cotton futures can be effectively used to protect the new counter-cyclical payment on cotton. Results indicate that some level of counter-cyclical payment hedging is optimal for risk averse decision makers. Optimal hedge ratios depend on planting time expectations of the marketing year average price as well as on what crop, if any, has been planted on the base acres receiving the counter-cyclical payment.

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File URL: http://purl.umn.edu/18975
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Bibliographic Info

Paper provided by NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management in its series 2003 Conference, April 21-22, 2003, St. Louis, Missouri with number 18975.

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Date of creation: 2003
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Handle: RePEc:ags:ncrthr:18975

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Web page: http://www.agebb.missouri.edu/ncrext/ncr134/

Related research

Keywords: Marketing; Risk and Uncertainty;

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Cited by:
  1. Sayle, James & Anderson, John D. & Coble, Keith H. & Hudson, Darren, 2006. "Optimal Hedging Strategies for Early-Planted Soybeans in the South," 2006 Annual meeting, July 23-26, Long Beach, CA 21200, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Anderson, John D. & Lacy, Curt & Forrest, Charlie S. & Little, Randall D., 2004. "Expected Utility Analysis of Stocker Cattle Ownership Versus Contract Grazing in the Southeast," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(03), December.

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