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

Author

Listed:
  • 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.

Suggested Citation

  • Anderson, John D. & Coble, Keith H. & Miller, J. Corey, 2003. "Using Private Risk Management Instruments To Manage Counter-Cyclical Payment Risks Under The New Farm Bill," 2003 Conference, April 21-22, 2003, St. Louis, Missouri 18975, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:ncrthr:18975
    DOI: 10.22004/ag.econ.18975
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    File URL: https://ageconsearch.umn.edu/record/18975/files/cp03an01.pdf
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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, Cambridge University Press, vol. 36(3), pages 719-730, December.
    3. Coble, Keith H. & Thomas, Sarah E. & Miller, J. Corey, 2007. "The Effect of Changing Government Subsidy Programs: An Analysis of Revenue at the Farm level," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34931, Southern Agricultural Economics Association.
    4. Ardian Harri & John Michael Riley & John D. Anderson & Keith H. Coble, 2009. "Managing economic risk in value‐based marketing of fed cattle," Agricultural Economics, International Association of Agricultural Economists, vol. 40(3), pages 295-306, May.

    More about this item

    Keywords

    Marketing; Risk and Uncertainty;

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