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Farmers' Use of Cash Forward Contracts, Futures Contracts, and Commodity Options

Author

Listed:
  • Paul, Allen B.
  • Heifner, Richard G.
  • Gordon, J. Douglas

Abstract

Unstable farm prices can spur farmers' interest in the various forms of forward selling. Forward selling, which involves selling crops or livestock in advance of delivery, enables farmers to reduce the risk that the price they get for their output might not cover the costs of their inputs and to assure outlets for highly specialized or perishable products. Among the various forms of forward selling are cash forward contracts, futures contracts, and commodity options. This report describes different types of forward contracts, the factors a farmer should consider, and the major pitfalls involved.

Suggested Citation

  • Paul, Allen B. & Heifner, Richard G. & Gordon, J. Douglas, 1985. "Farmers' Use of Cash Forward Contracts, Futures Contracts, and Commodity Options," Agricultural Economic Reports 307991, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uerser:307991
    DOI: 10.22004/ag.econ.307991
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    Cited by:

    1. Schaub, James & McArthur, W..C. & Hacklander, Duane & Glauber, Joseph & Leath, Mack & Doty, Harry, 1988. "The U.S. Soybean Industry," Agricultural Economic Reports 305423, United States Department of Agriculture, Economic Research Service.
    2. Larry S. Lev & Robert P. King, 1995. "MarketTools: An educational commodity marketing game," Agribusiness, John Wiley & Sons, Ltd., vol. 11(2), pages 187-193.
    3. Perry, Janet E. & Mishra, Ashok K., 1999. "Forward Contracting Of Inputs: A Farm-Level Analysis," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 17(2), pages 1-15.
    4. Larry D. Makus & Biing-Hwan Lin & John Carlson & Rose Krebill-Prather, 1990. "Factors influencing farm level use of futures and options in commodity marketing," Agribusiness, John Wiley & Sons, Ltd., vol. 6(6), pages 621-631.

    More about this item

    Keywords

    Marketing; Risk and Uncertainty;

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