Inventory and Transformation Hedging Effectiveness in Corn Crushing

Roger A. Dahlgran

Journal of Agricultural and Resource Economics, 2009, vol. 34, issue 01, 18

Abstract: Recently developed ethanol futures contracts now allow direct-hedging by ethanol producers. This study examines the effectiveness of one-through eight-week hedges between 2005 and 2008. Our findings show (a) ethanol inventory hedging effectiveness is significant for two-week and longer hedges, and increases with the hedging horizon; (b) ethanol futures are significantly superior to gasoline futures for hedging ethanol price risk for two-week and longer hedges; (c) the corn crushing hedge, utilizing corn and ethanol futures, is effective and provides price risk management capabilities comparable to those provided by the soybean crush hedge.

Keywords: Agricultural Finance; Crop Production/Industries (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:50081

DOI: 10.22004/ag.econ.50081

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