Did Producer Hedging Opportunities in the Live Hog Contract Decline?

Fabio C. Zanini and Philip Garcia
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Fabio C. Zanini: The University of Illinois, Urbana- Champaign
Philip Garcia: The University of Illinois, Urbana- Champaign

Finance from EconWPA

Abstract: The paper assesses the usefulness of selective hedging strategies when combined with forecast techniques in the live hog contract. The use of routine futures and options hedging is not attractive relative to a cash-only strategy. However, forecasting and hedging can contribute to price risk management improvement for risk-averse producers. Consistent with previous research, the results indicate that the live hog contract continues to offer producers attractive pricing opportunities. The findings suggests that the success of the new lean value carcass contract may depend on its ability to attract trading volume from outside the traditional production sector.

Keywords: hedging; forecasting; risk management; live hog futures; lean hog futures (search for similar items in EconPapers)
JEL-codes: Q Q13 (search for similar items in EconPapers)
Date: 1997-12-16
Note: Type of Document - pdf ; prepared on PC; to print on HP Laserjet; pages: 14; figures: included. Office for Futures and Options Research (OFOR) at the University of Illinois, Urbana-Champaign. Working Paper 97-05. For a complete list of OFOR working papers see
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:9712005

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