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

Allen B. Paul, Richard G. Heifner and J. Douglas Gordon

No 307991, Agricultural Economic Reports from United States Department of Agriculture, Economic Research Service

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.

Keywords: Marketing; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 38
Date: 1985-05
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uerser:307991

DOI: 10.22004/ag.econ.307991

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