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Systematic Hog Price Management: Selective Hedging and Long-Term Risk Sharing Packer Contracts

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  • Lawrence, John
  • Wang, Zhi

Abstract

In addition to futures and options markets, long-term risk sharing hog procurement contracts offered by packers provide some degree of price risk protection for pork producers. The window contract and a moving average hedging strategy generated similar average returns and level of profit risk protection. The cost-plus contract provided a greater degree of risk protection from prices below cost of production and uses a ledger account to ensure that prices average the same as the cash market over the long run.

Suggested Citation

Handle: RePEc:ags:nc8191:285690
DOI: 10.22004/ag.econ.285690
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