Hedging Break-Even Biodiesel Production Costs Using Soybean Oil Futures
The effectiveness of hedging volatile input prices for biodiesel producers is examined over one- to eight-week time horizons. Results reveal that hedging break-even soybean costs with soybean oil futures offers significant reductions in input price risk. The degree of risk reduction is dependent upon type of hedge, naÃ¯ve or risk-minimizing, and upon time horizon. In contrast, cross-hedging break-even poultry fat costs with soybean oil futures failed to reduce input price risk.
Volume (Year): 26 (2008)
Issue (Month): 1 ()
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