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Cross-hedging wild salmon prices

Rune Nygaard and Kristin H. Roll

Journal of Commodity Markets, 2024, vol. 33, issue C

Abstract: A number of studies have documented that there is a global market for salmon, in which wild and farmed salmon have a common price determination process. Recent studies report that Norwegian farmed salmon spot prices are also highly correlated with the Fish Pool salmon future contract price, indicating that the futures market can be an important risk management tool, as producers and buyers can hedge price risk. Here, we investigate whether the wild salmon prices can be cross-hedged against the Fish Pool salmon future contract, by testing whether the two prices are correlated.. If so, the Fish Pool future contracts can be used as a risk management tool for fishers and buyers of wild salmon. We find that this is the case, providing an additional link between wild and farmed salmon specifically, and between fisheries and aquaculture generally.

Keywords: Cross-hedging; Wild salmon; Fish pool; Risk management (search for similar items in EconPapers)
JEL-codes: D40 G13 Q22 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:33:y:2024:i:c:s2405851324000096

DOI: 10.1016/j.jcomm.2024.100390

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Journal of Commodity Markets is currently edited by Marcel Prokopczuk, Betty Simkins and Sjur Westgaard

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